Q2 2024 Gray Television Inc Earnings Call

August 8, 2024

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Operator: Welcome, ladies and gentlemen, to the Gray Media Conference call. If you know you'd like to ask a question, you may do so at any time during the call by pressing star 1 on your telephone keypad. Once 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 our chairman and CEO, Hilton Howell, Jr.

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Operator: Welcome, ladies and gentlemen, to the Gray Media Conference call. If you know you'd like to ask a question, you may do so at any time during the call by pressing star one on your telephone keypad. Once again, that's star one on your telephone keypad to join the question queue. And without further ado, I will now turn the program over to our chairman and CEO, Hilton Howell, Jr.

Speaker Change: Welcome ladies and gentlemen to the Gray Media Conference call.

Speaker Change: If you know you'd like to ask a question, you may do so at any time during the call by pressing star 1 on your telephone keypad.

Speaker Change: Once again, that's star one on your telephone keypad to join the question queue and without further ado I will now turn the program over to our chairman and CEO Hilton Howell jr

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

Hilton Howell: As the operator mentioned, I'm Hilton Howell, the chairman and CEO of Gray Television. Thank you all for joining our second 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, and Jeff Gignac, who succeeded Jim Ryan as our chief financial officer on the 1st of July. As usual, we will begin with the disclaimer that Kevin will provide.

Speaker Change: Thank you, operator. Good morning, everyone. As the operator mentioned, I'm Hilton Howell, the chairman and CEO of Gray Television.

Speaker Change: Thank you all for joining our second quarter 2024 earnings call.

Speaker Change: With me here in Atlanta are all of our executive officers.

Producers, Pat LaPlatney, our President and Co-CEO, Sandy Breland, our Chief Operating Officer.

Speaker Change: Kevin Latek, our Chief Legal and Development Officer, and Jeff Chignak, who succeeded Jim Ryan as our Chief Financial Officer on the 1st of July .

Kevin Latek: Thank you, Hilton. Good morning, everyone. Gray Television, commonly known as Gray Media or Gray Television, uses its website as a key source of company information. The website address is www.graymedia.com. We will file our quarterly report on Form 10-Q with the SEC today. We issued an updated investor presentation this morning that can be found on our website under investor relations. Included on 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.

Kevin Latek: Thank you, Hilton. Good morning, everyone. Gray Television, commonly known as Gray Media or Gray Television, uses its website as a key source of company information. The website address is www.graymedia.com. We will file our quarterly report on Form 10-Q with the SEC today. We issued an updated investor presentation this morning that can be found on our website under investor relations. On the call, there may be a discussion of non-GAAP financial measures, and in particular adjusted EBITDA, the leveraged ratio denominator, and certain leveraged 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.

Kevin Latek: Thank you, Hilton. Good morning, everyone.

Kevin: As usual, we will begin with a disclaimer that Kevin will provide. Kevin? Thank you, Hilton. Good morning, everyone. Gray Television, commonly known as Gray Media or Gray, uses its website as a key source of company information.

Kevin Lateak: Gray Television, commonly known as Gray Media or Gray, uses its website as a key source of company information. The website address is www.graymedia.com. We will file our quarterly report on Form 10-Q with the SEC today. We issued an updated investor presentation this morning that can be found on our website under investor relations. Included on the call may be a discussion of non-GAAP financial measures, and in particular adjusted EBITDA, 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 and its analysis and valuation of our company.

Kevin Latek: The website address is www.graymedia.com. We will file our quarterly report on Form 10-Q with the SEC today.

Speaker Change: We issued an updated investor presentation this morning that can be found on our website under investor relations.

Speaker Change: Included on the call may be a discussion of non-GAAP financial measures, and in particular adjusted EBITDA, leverage ratio denominator, and certain leverage ratios.

Speaker Change: 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.

Kevin Latek: We put it in our earnings release, as well as posted on a website are reconciliations of these financial measures to the gap measures reported in our financial statement. Certain matters discussed on 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. And I now turn the call to Hilton.

Kevin Latek: The reconciliation of these financial measures to the gap measures reported in our financial statement is included in our earnings release, as well as posted on our website. Additionally, certain matters discussed on 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. And I now turn the call to Hilton.

Speaker Change: Included in our earnings release.

Speaker Change: As well as posted on our website are reconciliations of these financial measures to the GAAP measures reported in our financial statements.

Speaker Change: The certain matters discussed on this call may include forward-looking statements regarding, among other things, future operating results. Those statements are subject to a number of risks and uncertainties.

Speaker Change: 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 report filed with the SEC.

Hilton Howell: 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, and I now turn the call to Hilton.

Hilton Howell: Thank you, Kevin. As usual, there was no slowing down this summer for Gray. We certainly packed a lot of very exciting innovation, collaboration, and straightforward quality journalism into the last couple of months. Our local news stations and our production companies are performing at the top of their games. Our financial results evidence this success as much as the fantastic award-winning work of several stations that have been recognized over just the past few months from investigative reporters and editors, the National Association of Broadcasters Leadership Foundation, the Mental Health America Association, and the Society of Professional Journalists.

Hilton Howell: Thank you, Kevin. As usual, there was no slowing down this summer for Gray. We certainly packed a lot of very exciting innovation, collaboration, and straightforward quality journalism into the last couple of months. Our local news stations and our production companies are performing at the top of their games. Our financial results evidence the success as much as the fantastic award-winning work of several stations that have been recognized over just the past few months from investigative reporters and editors, the National Association of Broadcasters Leadership Foundation, the Mental Health America Association, and the Society of Professional Journalists.

Hilton Howell: Thank you, Kevin. As usual, there was no slowing down this summer for Gray. We certainly packed a lot of very exciting innovation, collaboration and straightforward quality journalism into the last couple of months. Our local news stations and our production companies are performing at the top of their game. Our financial results evidence the success as much as the fantastic award-winning work of several stations that have been recognized over just the past few months from the investigative reporters and editors, the National Association of Broadcasters Leadership Foundation, the Mental Health America Association, and the Society of Professional Journalists.

Hilton: Thank you, Kevin. As usual, there was no slowing down this summer for Gray. We certainly packed a lot of very exciting innovation, collaboration, and straightforward quality journalism into the last couple of months.

Hilton: Our local news stations and our production companies are performing at the top of their game. Our financial results evidence this success as much as the fantastic, award-winning work of several stations that have been recognized over just the past few months.

Hilton: From the Investigative Reporters and Editors, the National Association of Broadcasters Leadership Foundation, the Mental Health America Association, and the Society of Professional Journalists.

Hilton Howell: We are honored to work with dedicated employees at every level of this company, and we congratulate all those involved in these award-winning projects who are making a real impact with investigative journalism one story at a time. Gray is also continuing to expand its content and reach in many ways, from the announcement of our upcoming live broadcast of the Harlem Globetrotters game on August 18th, which will be produced by our subsidiary Raycom Sports, to the launch of new networks like Rock Entertainment Sports Network in Ohio and Palmetto Sports and Entertainment in South Carolina. We are constantly looking for ways to entertain and inform our viewers.

Hilton Howell: We are honored to work with dedicated employees at every level of this company, and we congratulate all those involved on these award-winning projects who are making a real impact with investigative journalism one story at a time. Gray is also continuing to expand our concept and reach in many ways, from the announcement of our upcoming live broadcast of the Harlem Road Trotters game on August the 18th, which will be produced by our subsidiary Raycombe Sports, to the launching of new networks like Rock Entertainment Sports Network in Ohio and Palmetto Sports Entertainment in South Carolina.

Hilton: We are honored to work with dedicated employees at every level of this company, and we congratulate all those involved on these award-winning projects who are making a real impact with investigative journalism, one story at a time.

Speaker Change: Gray has also continued to expand our content and reach in many ways.

Hilton: From the announcement of our upcoming live broadcast of the Harlem Globetrotters game on August the 18th Which will be produced by our subsidiary Raycom Sports

Hilton: to the launching of new networks like Rock Entertainment Sports Network in Ohio and Palmetto Sports and Entertainment in South Carolina. We are constantly looking for ways to entertain and inform our viewers.

Hilton Howell: With this in mind, I'm personally pleased to review our second quarter's results for our company with you today. Our total revenue in the second quarter was $826 million, an increase of 2% from the second quarter of 2023. Net income was $22 million in the second quarter, compared to $4 million in the second quarter of 2023. Adjusted EBITDA was $225 million, essentially unchanged from the second quarter last year.

Speaker Change: With this backdrop, I'm personally pleased to review our second quarter's results for our company with you today. Our total revenue in the second quarter was $826 million, an increase of 2% from the second quarter of 2023.

Speaker Change: Net income was $22 million in the second quarter, compared to $4 million in the second quarter of 2023. Adjusted EBITDA was $225 million, essentially unchanged from the second quarter last year.

Hilton Howell: Our core advertising revenue in the second quarter was $373 million, which was slightly below the low end of our guidance range. To be specific, our core advertising revenue was about 5.7 million less than 2023's result. But please remember that Q2 and 2023 were an exceptionally strong 4% ahead of 2022's result. So all in all, we feel quite good with where we are. Political advertising revenue in the second quarter was $47 million on a combined historical basis, which includes the results of our acquired stations and excludes the results of our divested stations.

Hilton Howell: Our core advertising revenue in the second quarter was $373 million, which was slightly below the low end of our guidance range. To be specific, our core advertising revenue was about 5.7 million less than 2023's result. But please remember that Q2 in 2023 was an exceptionally strong 4% ahead of 2022's result. So all in all, we feel quite good with where we are. Political advertising revenue in the second quarter was $47 million on a combined historical basis, which includes the results of our acquired stations and excludes the results of our divested stations.

Hilton Howell: Our core advertising revenue in the second quarter was $373 million, which was slightly below the low end of our guidance range. To be specific, our core advertising revenue was about 5.7 million less than 2023's result. But please remember that Q2 and 2023 was an exceptionally strong 4% ahead of 2022's result. So all in all, we feel quite good with where we are, political advertising revenue in the second quarter was $47 million on a combined historical basis, which includes the results of our acquired stations and excludes the results of our divested stations.

Speaker Change: Our core advertising revenue in the second quarter was $373 million, which was slightly below the low end of our guidance range.

Speaker Change: To be specific, our core advertising revenue was about $5.7 million less than 2023's result. But please remember that Q2 and 2023 was an exceptionally strong 4% ahead of 2022's results.

Speaker Change: So, all in all, we feel quite good with where we are.

Speaker Change: Political advertising revenue in the second quarter was $47 million on a combined historical basis, which includes the results of our acquired stations and excludes the results of our divested stations.

Hilton Howell: Our second quarter political ad revenues blew by the second quarter of 2020, the last presidential election year, by a whopping 62%. As you may have seen in this morning's earnings release, we are lowering our full revenue guide by $75 million for core ad revenue and $25 million for retransmission revenue.

Hilton Howell: Our second quarter political ad revenues blew by the second quarter of 2020, the last presidential election year by a whopping 62%. As you may have seen in this morning's earnings release, we are lowering our full revenue guide by $75 million for core ad revenue and $25 million for retransmission revenue. These adjustments reflect our current expectations for a continuing healthy local economy, continuing growing digital ad business, continuing strong political revenues, and a significant amount of political displace. At the same time, we are continuing to carefully review all of our opportunities to increase

Speaker Change: Our second quarter political ad revenues blew by the second quarter of 2020, the last presidential election year, by a whopping 62 percent.

Hilton Howell: These adjustments reflect our current expectations for a continuing healthy local economy, continuing growing digital ad business, continuing strong political revenues, and a significant amount of political displacement. At the same time, we are continuing to carefully review all of our opportunities to increase revenue, and reduce expenses, even more intensely than this already efficient company always does. Meanwhile, we have really good news to share about Assembly Atlanta. Last week, D.I.OPSI and the Teamsters Unions ratified new collective bargaining agreements that cover the important trade and craft workers in the film and television production industry.

Speaker Change: As you may have seen in this morning's earnings release, we are lowering our full revenue guide by $75 million for core ad revenue and $25 million for retransmission revenue.

Hilton Howell: These adjustments reflect our current expectations for a continuing healthy local economy, continuing growing digital ad business, continuing strong political revenues, and a significant amount of political displacement. At the same time, we are continuing to carefully review all of our opportunities to increase revenue, and reduce expenses, even more intensely than this already efficient company always does. Meanwhile, we have really good news to share about Assembly Atlanta. Last week, the IOC and the Teamsters Unions ratified new collective bargaining agreements that cover the important trade and craft workers in the film and television production industry.

Speaker Change: These adjustments reflect our current expectations for a continuing healthy local economy, continuing growing digital ad business, continuing strong political revenues, and a significant amount of political displacement.

Hilton Howell: Produced by Hilton Howell Produced by Hilton Howell Meanwhile, we have really good news to share on Assembly Atlanta. Last week, D. I.O.P.T.

Hilton: At the same time, we are continuing to carefully review all of our opportunities to increase revenue, reduce expenses, even more intensely than this already efficient company always does.

Hilton Howell: With the risk of another Hollywood strike averted, we are now busy again lining up film and television productions for our sound stages and related facilities here in Atlanta. In fact, we have already signed our first long-term studio lease for multiple stages within the portion of Assembly Studios that are not leased by NBCUniversal. Last week, Gray entered into a lease with one of the major studio companies for the full suite of facilities needed to support a new, high-quality, episodic television drama for one of the big four broadcast networks.

Hilton: Meanwhile, we have really good news to share on Assembly Atlanta. Last week...

Hilton Howell: and Teamster's unions, ratified new collective bargaining agreements that covered the important trade and craft workers in the film and television production industry. With the risk of another Hollywood strike averted, we are now busy again lining up film and television productions for our sound stages and related facilities here in Atlanta. In fact, we've already signed our first long-term studio lease for multiple stages within the portion of Assembly Studios that are not leased by NBCUniversal.

Speaker Change: the oing and teamsters unions ratified new collectedive bargain agreements that cover the important tray and craft workers in the film and televisionand production inindustryain

Speaker Change: With the risk of another Hollywood strike averted, we are now busy again lining up film and television productions for our sound stages and related facilities here in Atlanta.

Speaker Change: In fact, we already signed our first long-term studio lease for multiple stages within the portion of Assembly Studios that are not leased by NBCUniversal.

Hilton Howell: Last week, Gray entered into a lease with one of the major studio companies for the full suite of facilities needed to support a new high-quality episodic television drama for one of the big four broadcast networks. Our own stations that are affiliates of that network will actually start airing this new network show early next year. We are sincerely thrilled to welcome this production to the Atlanta metro area and to our world-class studio production complex at Assembly Atlanta, and we expect it to be a mutually beneficial long-term relationship.

Speaker Change: Last week, Gray entered into a lease with one of the major studio companies for the full suite of facilities needed to support a new, high-quality, episodic television drama for one of the big four broadcast networks.

Hilton Howell: Our own stations that are affiliates of that network will actually start airing this new network show early next year. We are sincerely thrilled to welcome this production to the Atlanta metro area and to our world-class studio production complex at Assembly Atlanta, and we expect it to be a mutually beneficial, long-term relationship.

Speaker Change: Our own stations that are affiliates of that network will actually start airing this new network show early next year.

Speaker Change: We are sincerely thrilled to welcome this production to the Atlanta metro area and to our world-class studio production complex at Assembly Atlanta, and we expect it to be a mutually beneficial long-term relationship.

Hilton Howell: While we are proud of our recent and anticipated operational achievements, the most significant activity for Gray during the second quarter was undoubtedly the successful, refinancing of our 2026 debt maturities. In particular, we extended almost $2 billion of debt maturities to 2029, while also increasing our evolving credit facility to $680 million. As a result of these efforts, we no longer have material near-term maturity. Through smart execution of the business, including increased efforts to raise revenues and thoughtful decisions around reducing costs and capital expenditures, which then expect to generate significant pre-cash flow later this year and through 2026 that can and will be used to repurchase and pay off debt.

Hilton Howell: While we are proud of our recent and anticipated operational achievements, the most significant activity for Gray during the second quarter was undoubtedly the successful refinancing of our 2026 debt maturities. In particular, we extended almost $2 billion of debt maturities to 2029 while also increasing our revolving credit facility to $680 million. As a result of these efforts, we no longer have material near-term maturity through smart execution of the business, including increased efforts to raise revenues and thoughtful decisions around reducing costs and capital expenditures.

Hilton Howell: While we are proud of our recent and anticipated operational achievements, the most significant activity for Gray during the second quarter was undoubtedly the successful refinancing of our 2026 debt maturities. In particular, we extended almost $2 billion of debt maturities to 2029, while also increasing our evolving credit facility to $680 million. As a result of these efforts, we no longer have material near-term maturity, through smart execution of the business, including increased efforts to raise revenues and thoughtful decisions around reducing costs and capital expenditures, which then are expected to generate significant free cash flow later this year and through 2026 that can and will be used to repurchase and pay off debt.

Speaker Change: While we are proud of our recent and anticipated operational achievements, the most significant activity for Gray during the second quarter was undoubtedly the successful

Speaker Change: Refinancing of our 2026 debt maturities. In particular, we extended almost $2 billion of debt maturities to 2029, while also increasing our revolving credit facility to $680 million.

Speaker Change: as a result of these efforts we no longer have a material near-term materurities

Speaker Change: Through smart execution of the business, including increased efforts to raise revenues and thoughtful decisions around reducing costs.

Hilton Howell: We expect to generate significant pre-tax cash flow later this year and through 2026 that can and will be used to repurchase and pay off debt. As Jeff Gignac will soon explain in his remarks, we began open market repurchases of our 2027 notes immediately after the closing of our refinancing. And that effort continues into this quarter. Reducing debt and leverage remains our top capital allocation priority. We have said this now for a few quarters, and we will continue to reiterate this guiding principle until our debt and leverage comes back down to our usual, more comfortable level. More importantly, and as Pleasure and Our Support for Reducing Leverage, you will continue to see Gray doing what it said it would do on this critical topic as well as in every other regard. Pat and the rest of the team will now provide some more color around our recent experiences and

Speaker Change: and Capital Expenditures, which then expect to generate significant pre-cash flow later this year and through 2026 that can and will be used to repurchase and pay off debt.

Hilton Howell: As Jeff Gignac will soon explain in his remarks, we began open market repurchases of our 2027 notes immediately after the closing of our refinancing, and that effort continues into this quarter. Reducing Debt and Leverage remains our top capital allocation for as, We have said this now for a few quarters, and we will continue to reiterate this guiding principle until our debt and leverage comes back down to our usual, more comfortable level, more importantly, and Pleasure in Our Support for Reducing Leverage.

Hilton Howell: As Jeff Gignac will soon explain in his remarks, we began open market repurchases of our 2027 notes immediately after the closing of our refinancing, and that effort continues into this quarter. Reducing debt and leverage remains our top capital allocation priority. We have said this now for a few quarters, and we will continue to reiterate this guiding principle until our debt and leverage come back down to our usual, more comfortable level, and, more importantly, and pride in our Support for Reducing Leverage.

Jeff Janiak: As Jeff Janiak will soon explain in his remarks, we began open market repurchases of our 2027 notes immediately after the closing of our refinancing, and that effort continues into this quarter.

Jeff Janiak: reducing debt and leverage remains our top capital allocation foring

Speaker Change: We have said this now for a few quarters and we will continue to reiterate this guiding principle until our debt and leverage comes back down to our usual more comfortable levels.

Hilton Howell: You will continue to see Gray doing what it said it would do on this critical topic as well as every other regard. Pat and the rest of the team will now provide some more color around our recent experiences and upcoming opportunities.

Hilton Howell: You will continue to see Gray doing what it said it would do on this critical topic as well as in every other regard. Pat and the rest of the team will now provide some more color around our recent experiences and upcoming opportunities.

Jeff Janiak: More importantly...

Pat LaPlatney: In pledging our support for reducing leverage, you will continue to see Gray doing what it said it would do on this critical topic as well as every other regard. Pat and the rest of the team will now provide some more color around our recent experiences and upcoming opportunities.

Pat LaPlatney: Our core advertising revenues started this second quarter strong but tailed off a little in June. In the end, the 2024 second quarter ad revenues are about a point and a half less than 2023. For context, Core in the second quarter of this year did not include about five million in revenues attributable to the NCAA Final Four games that we broadcast in 23, but did not have in 24. And as Hilton mentioned, we were working against a pretty tough comp at plus four from Q2 of 23.

Pat LaPlatney: Our core advertising revenues started the second quarter strong but tailed off a little in June. In the end, our 2024 second quarter ad revenues are about a point and a half less than 2023. For context, Core in the second quarter of this year did not include about five million in revenues attributable to the NCAA Final Four games that we broadcast in 23, but did not have in 24. And, as Hilton mentioned, we were working against a pretty tough comp at plus four from Q2-23.

Pat LaPlatney: Our core advertising revenues started this second quarter strong but tailed off a little in June. In the end, 2024 second quarter ad revenues are about a point and a half less than 2023. For context, Core in the second quarter of this year did not include about five million in revenues attributable to the NCAA Final Four games that we broadcast in 23, but did not have in 24. And, as Hilton mentioned, we were working against a pretty tough comp at plus four from Q2 of 23.

Pat LaPlatney: Thanks, Hilton.

Pat LaPlatney: Our core advertising revenues started this second quarter strong, but tailed off a little in June .

Speaker Change: In the end, 2024 second quarter ad revenues are about a point and a half less than last year.

Pat LaPlatney: than two thousand and twenty three

Pat LaPlatney: For context, CORE in the second quarter of this year did not include about 5 million in revenues attributable to the NCAA Final Four games that we broadcast in 23, but did not have in 24. And as Hilton mentioned, we were working against a pretty tough comp at plus four from Q2 of 23.

Pat LaPlatney: Looking ahead to the third quarter of 24, we expect core will be flat to up low single-digit percentages compared to the third quarter of 23, driven primarily by the Olympics, which are proving to be an extraordinary event for both viewers and advertisers. We currently anticipate that our 56 NBC affiliates, that cover about 11% of U.S. homes, will generate approximately $19 million of Olympic advertising revenue in the third quarter. And for those of you wondering, some of that is political.

Pat LaPlatney: Looking ahead to third quarter of 24, we expect Coral will be flat to up low single digit percentages compared to the third quarter of 23, driven primarily by the Olympics, which are proving to be an extraordinary event for both viewers and advertisers. We currently anticipate that our 56 NBC affiliates, that cover about 11% of U.S. homes, will generate approximately $19 million of Olympic advertising revenue in the third quarter. And for those of you wondering, some of that is political.

Speaker Change: Looking ahead to third quarter of 24, we expect Coral will be flat to up low single digit percentages compared to the third quarter of 23, driven primarily by the Olympics, which are proving to be an extraordinary event for both viewers and advertisers.

Speaker Change: We currently anticipate that our 56 NBC affiliates that cover about 11% of U.S. homes will generate approximately $19 million of Olympic advertising revenue in the third quarter.

Pat LaPlatney: Obviously, CORE will be impacted by displacement from strong political demand as we move through the third quarter of 24, especially in September. However, displacement is likely to be more impactful this year than we originally expected, with political ad revenue arriving later in the year in a more compact window, forcing us to displace more commercial ads to make room for political ads. Consequently, as we consider possible ranges of core and political ad revenues in the fourth quarter,

Pat LaPlatney: Obviously, Corp will be impacted by displacement from strong political demand as we move through the third quarter of 24, especially in September. Displacement is likely to be more impactful this year than we originally expected, with political ad revenue arriving later in the year in a more compact window, forcing us to displace more commercial ads to make room for political ads. Consequently, as we consider possible ranges of core and political ad revenues in the fourth quarter.

Speaker Change: And for those of you wondering, some of that is political.

Speaker Change: Obviously, CORE will be impacted by displacement from strong political demand as we move through the third quarter of 2024, especially in September .

Speaker Change: Displacement is likely to be more impactful this year than we originally expected, with political ad revenue arriving later in the year in a more compact window, forcing us to displace more commercial ads to make room for political ads.

Pat LaPlatney: We determined that it would be prudent to reduce our internal forecast for the quarter and fourth quarter. As a result of that decision, we today reduced our four-year guide for CORE from $1.6 billion to $1.525 billion. It's important to remember that we reduced our full year 2024 guide for broadcast operating expenses by $50 million on our last earnings. Today, we are lowering our guidance for broadcast OpEx, corporate, and admin expenses for the full year by an additional $20 million and our capital expense range by another approximately $20 million.

Pat LaPlatney: We determined that it would be prudent to reduce our internal forecast for core and fourth quarter. As a result of that decision, we today reduced our four year guide for CORE from $1.6 billion to $1.525 billion. It's important to remember that we reduced our full year 2024 guide for broadcast operating expenses by $50 million on our last earnings. Today we are lowering our guidance for broadcast OpEx, corporate and admin expenses for the full year by an additional $20 million and our capital expense range by another approximately $20 million.

Speaker Change: Consequently, as we consider possible ranges of core and political ad revenues in the fourth quarter, we determined that it would be prudent to reduce our internal forecast for core in fourth quarter.

Speaker Change: As a result of that decision, we today reduced our four-year guide for CORE from $1.6 billion to $1.525 billion.

Speaker Change: It's important to remember that we reduced our full year 2024 guide for broadcast operating expenses by $50 million on our last earnings call.

Speaker Change: Today, we are lowering our guidance for broadcast OPEX and corporate and admin expenses for the full year by an additional $20 million and our capital expense range by another approximately $20 million.

Pat LaPlatney: While Gray has made good progress managing costs and expenses this year, we are redoubling our efforts to find thoughtful ways to reduce operating capital expenses. We are continuing to lean on our strong in-house sales training programs in our less relentless effort in developing new local direct business, which is essentially our local sales force finding a customer that's new to gray. In the second quarter, we continue to break records again by again, posting a double digit percentage revenue increase for new local direct business over the second quarter of 23.

Pat LaPlatney: While Gray has made good progress managing costs and expenses this year, we are redoubling our efforts to find thoughtful ways to reduce operating capital expenses. We are continuing to lean on our strong in-house sales training programs and relentless efforts to develop new local direct business, which is essentially our local sales force finding a customer that's new to Gray. In the second quarter, we continue to break records again, pardon me, by posting a double-digit percentage revenue increase for new local direct business over the second quarter of 23.

Pat LaPlatney: While Gray has made good progress managing costs and expenses this year, we are redoubling our efforts to find thoughtful ways to reduce operating capital expenses. We are continuing to lean on our strong in-house sales training programs and relentless effort in developing new local direct business, which is essentially our local sales force finding a customer that's new to great. In the second quarter, we continue to break records again, pardon me, by again posting a double digit percentage revenue increase for new local direct business over the second quarter of 23.

Speaker Change: While Gray has made good progress managing costs and expenses this year, we are redoubling our efforts to find thoughtful ways to reduce operating and capital expenses.

Speaker Change: We are continuing to lean on our strong in-house sales training programs and relentless effort in developing new local direct business, which is essentially our local sales force finding a customer that's new to Gray.

Speaker Change: In the second quarter, we continued to break records again, pardon me, by again posting a double-digit percentage revenue increase for new local direct business over the second quarter of 23.

Pat LaPlatney: These strong results continued into July of 24, which delivered 20% more new local direct business than July of 23, some of which is likely attributable to the Olympics on our NBC station. Your digital businesses are also continuing to grow audience and revenue. In the second quarter, we once again set new records for engagement, as well as double-digit growth in the number of digital advertisers and in total digital revenue, which we include in core ad revenue.

Pat LaPlatney: These strong results continued into July 24, which delivered 20% more new local direct business than July of 23, and some of which is likely attributable to the Olympics on our NBC station. Digital businesses are also continuing to grow their audience and revenue. In the second quarter, we once again set new records for engagement, as well as double-digit growth in the number of digital advertisers and in total digital revenue, which we include in core ad revenue.

Speaker Change: These strong results continued into July of 24, which delivered 20% more new local direct business than July of 23, some of which is likely attributable to the Olympics on our NBC stations.

Speaker Change: Our digital businesses are also continuing to grow audience and revenues.

Speaker Change: In the second quarter, we once again set new records for engagement.

Speaker Change: as well as double digit growth in the number of digital advertisers and in total digital revenue, which we include in core ad revenue. Our connected TV and fast channel offerings continue to roll out, finding viewers and attracting advertisers in this important and growing part of the ecosystem.

Pat LaPlatney: Our connected TV and fast channel offerings continue to roll out, finding viewers and attracting advertisers in this important and growing part of the ecosystem. In terms of political advertising revenue, through June 30, the first half of the year, our political ad revenues were $74 million compared to the $79 million that we recorded in the first half of 2020 on a combined historical basis. First half 2020 political revenues benefited from $31 million more in presidential primary outspending than we achieved in the first half of 2024, otherwise known as the Bloomberg Stires. We certainly cannot predict where political revenue will end up this year, given the unprecedented nature of this year's presidential.

Pat LaPlatney: Our connected TV and fast channel offerings continue to roll out, finding viewers and attracting advertisers in this important and growing part of the ecosystem. In terms of political advertising revenue, through June 30, the first half of the year, our political ad revenues were $74 million compared to the $79 million that we recorded in the first half of 2020. On a combined historical basis, first half 2020 political revenues benefited from 31 million more in presidential primary outspending that we achieved in the first half of 2020 than we achieved in the first half of 2024, otherwise known as the Bloomberg Stires. We certainly cannot predict where political revenue will end up this year, given the unprecedented nature of this year's presidential election.

Pat LaPlatney: Our connected TV and fast channel offerings continue to roll out, finding viewers and attracting advertisers in this important and growing part of the ecosystem. In terms of political advertising revenue, through June 30, the first half of the year, our political ad revenues were $74 million compared to the $79 million that we recorded in the first half of 2020. On a combined historical basis, first half 2020 political revenues benefited from 31 million more in presidential primary outspending that we achieved in the first half of 2020 than we achieved in the first half of 2024, otherwise known as the Bloomberg Stires. We certainly cannot predict where political revenue will end up this year given the unprecedented nature of this year's presidential election.

Speaker Change: In terms of political advertising revenue, through June 30, the first half of the year, our political ad revenues were $74 million compared to the $79 million that we recorded in the first half of 2020 on a combined historical basis.

Speaker Change: First half 2020, political revenues benefited from $31 million more in presidential primary outspending than we achieved in the first half of 2024, otherwise known as the Bloomberg-Steyer effect.

Speaker Change: We certainly cannot predict where political revenue will end up this year given the unprecedented nature of this year's presidential race.

Pat LaPlatney: We are particularly encouraged.

Pat LaPlatney: We are particularly encouraged to

Pat LaPlatney: We are particularly encouraged by this.

Speaker Change: We are particularly encouraged to see the presidential race, since the end of the second quarter, become very competitive and energize races up and down the ballot, fueling substantially more fundraising.

Speaker Change: For these reasons, we continue to anticipate very strong political ad revenues for the full year.

Sandy Breland: Thank you, Pat. We not only had success on the sales side, but once again, we served our audiences with high-quality local journalism. Throughout the second quarter, we continued breaking important news stories, as well as gathering awards, recognitions, and, most importantly, audiences, as we have documented on numerous recent calls and press releases. We are very proud to be investing in local news, weather, and sports, as well as investigative, political, and franchise stories that our local communities want.

Sandy Breland: Thank you, Pat. We not only had success on the sales side, once again, we served our audiences with high-quality local journalism. Throughout the second quarter, we continued breaking important news stories, as well as gathering awards, recognitions, and most importantly, audiences, as we have been documenting on numerous recent calls and press releases. We are very proud to be investing in local news, weather, and sports, as well as investigative, political, and franchise stories that our local communities want.

Speaker Change: I now turn the call over to Sandy.

Sandy Breland: Thank you, Pat.

Sandy Breland: We not only had success on the sales side, once again, we served our audiences with high quality local journalism. Throughout the second quarter, we continued breaking important news stories, as well as gathering awards, recognitions, and most importantly, audiences, as we have been documenting on numerous recent calls and press releases.

Sandy Breland: We are very proud to be investing in local news, weather, and sports, as well as investigative, political, and franchise stories that our local communities want.

Sandy Breland: It is these efforts that allow our great sales teams to provide the advertising solutions that are clearly responding with businesses in our market. In some of our large markets, we participate in third-party audits with all other local television stations to track the shares our stations obtain from the television-only portion of local ad markets. The audits from the second quarter indicate that total ad dollars in some markets did decrease slightly over the past year.

Sandy Breland: It is these efforts that allow our great sales teams to provide the advertising solutions that are clearly resonating with businesses in our market. In some of our large markets, we participate in third-party audits with all other local television stations to track the shares our stations obtain from the television-only portion of local ad markets. The audits from the second quarter indicate that total ad dollars in some markets did decrease slightly over the past year.

Speaker Change: It is these efforts that allow our great sales teams to provide the advertising solutions that are clearly resonating with businesses in our markets.

Speaker Change: In some of our large markets, we participate in third-party audits with all other local television stations to track the shares our stations obtain from the television-only portion of local ad markets.

Speaker Change: The audits from the second quarter indicate that total ad dollars in some markets did decrease slightly over the past year.

Sandy Breland: At the same time, however, the second quarter audits revealed that gray stations grew their shares of total advertising, as well as their shares of core revenue fueled by strong digital sales and political ad revenue. We are not surprised by these results, because we have seen again and again that maintaining a strong focus on local newscasts and community involvement retains viewers regardless of economic conditions. Our strong local stations proved themselves over the past year as they demonstrated the power of television to a large number of local professional sports teams and fans alike.

Sandy Breland: At the same time, however, the second quarter audits revealed that gray stations grew their shares of total advertising, as well as their shares of core revenue fueled by strong digital sales and political ad revenue. We are not surprised by these results because we have seen again and again that maintaining a strong focus on local newscasts and community involvement retains viewers regardless of economic conditions. Our strong local stations proved themselves over the past year as they demonstrated the power of television to a large number of local professional sports teams and fans alike.

Speaker Change: At the same time, however, the second quarter audits revealed that Gray's stations grew their shares of total advertising, as well as their shares of core revenue fueled by strong digital sales and political ad revenue.

Speaker Change: We are not surprised by these results, because we have seen again and again that maintaining a strong focus on local newscasts and community involvement retains viewers regardless of economic conditions.

Speaker Change: Our strong local stations proved themselves over the past year as they demonstrated the power of television to a large number of local professional sports teams and fans alike.

Sandy Breland: In the last two weeks, as Hilton mentioned, we announced the launch of Rock Entertainment Sports in partnership with Dan Gilbert's Sports and Entertainment Properties, as well as Palmetto Sports and Entertainment, a new statewide sports network in South Carolina. Throughout this year, we have been working aggressively on a number of other opportunities to bring more support back to local broadcast television stations. We are optimistic that we will have some exciting news in this area to announce soon, so please stay tuned. I now turn the call over to Kevin.

Sandy Breland: In the last two weeks, as Hilton mentioned, we announced the launch of Rock Entertainment Sports in partnership with Dan Gilbert's Sports and Entertainment Properties, as well as Palmetto Sports and Entertainment, a new statewide sports network in South Carolina. Throughout this year, we have been working aggressively on a number of other opportunities to bring more support back to local broadcast television stations. We are optimistic that we will have some exciting news in this area to announce soon. So please, stay tuned. I now turn the call over to Kevin.

Sandy Breland: In the last two weeks, as Hilton mentioned, we announced the launch of Rock Entertainment Sports, in partnership with Dan Gilbert's Sports and Entertainment Properties, as well as Palmetto Sports and Entertainment, a new statewide sports network in South Carolina.

Speaker Change: throughout this year we have been working aggressively on a number of other opportunities to bring more sport fact to local broadcast television station we are optimistic that we will have some exciting news in this area to announce in so please stay in i now turn to call over come

Kevin Latek: Hi Sandy. As most of you know, over the course of a three-year cycle, Gray renews retransmission consent agreements covering roughly 400 traditional pay TV operators who carry our TV station signals to tens of millions of our mutual customers. Our current cycle began in the second half of 2022. We had anticipated some final renewal throughout the second half of this year. We can now report that, within the past few days, Gray has reached agreements and agreements in principle, completing the current 2022-2024 renewal cycle.

Kevin Latek: I thank you, Sandy. As most of you know, over the course of a three-year cycle, Gray renews retransmission consent agreements covering roughly 400 traditional pay TV operators who carry our TV station signals to tens of millions of our mutual customers. Our current cycle began in the second half of 2022. We had anticipated some final renewals throughout the second half of this year. We can now report that, within the past few days, Gray has reached agreements and agreements in principle, completing the current 2022-2024 renewal cycle.

Kevin Latek: I thank you, Sandy. As most of you know, over the course of a three year cycle, Gray renews retransmission consent agreements covering roughly 400 traditional pay TV operators who carry our TV station signals to tens of millions of our mutual customers. Our current cycle began in the second half. 2022. We had anticipated some final renewal throughout the second half of this year. We can now report that within the past few days, Gray has reached agreements and agreements in principle completing the current 2022-2024 renewal cycle.

Kevin Latek: Our next set of material MVPD retrends renewals occurs in the first quarter of 2026, with operators who serve approximately 23% of our traditional MVPD sub-base. In the second quarter of 2026, our renewals will cover about 18% of our traditional MVPD subscribers. The next group covering about 34% of these subs will come up in the first quarter of 2027, with the remaining 25% of traditional MVPD subs covered in the final tranche of renewals occurring in the third quarter of 2027. Once again, Gray has completed a retrans renewal cycle without a single public dispute impacting its business, the distributors' business, or our mutual customers.

Kevin Latek: Our next set of material MVPD retrends renewals occurs in the first quarter of 2026, with operators who serve approximately 23% of our traditional MVPD sub-base. In the second quarter of 2026, our renewals will cover about 18% of our traditional MVPD subscribers. The next group covering about 34% of these subs will come up in the first quarter of 2027, with the remaining 25% of traditional MVPD subs covered in the final tranche of renewals occurring in the third quarter of 2027. Once again, Gray has completed a retrans renewal cycle without a single public dispute impacting our business, the distributors business or our mutual customers.

Sandy Breland: Hi, thank you, Sandy. As most of you know, over the course of a three-year cycle, Gray renews retransmission consent agreements covering roughly 400 traditional pay-to-be operators who carry our TV station signals to tens of millions of our mutual customers.

Speaker Change: Our current cycle began in the second half of 2022.

Speaker Change: But we had anticipated some final renewal throughout the second half of this year.

Speaker Change: We can now report that within the past few days, Gray has reached agreements and agreements in principle completing the current 2022-2024 renewal cycle.

Kevin Latek: Our next set of material MVPD retrends renewals occurs in the first quarter of 2026, with operators who serve approximately 23% of our traditional MVPD sub-base. In the second quarter of 2026, our renewals will cover about 18% of our traditional MVPD subscribers. The next group covering about 34% of these subscribers will come up in the first quarter of 2027, with the remaining 25% of traditional MVPD subscribers covered in the final tranche of renewals occurring in the third quarter of 2027.

Sandy Breland: Our next set of material MVPD retrends renewals occurs in the first quarter of 2026.

Sandy Breland: with operators who serve approximately 23% of our traditional MVPD sub-base.

Speaker Change: In the second quarter of 2026, our renewals will cover about 18% of our traditional MVPD subscribers.

Speaker Change: The next group, covering about 34% of these subs, will come up in the first quarter of 2027, with the remaining 25% of traditional MVPD subs covered in the final tranche of renewals occurring in the third quarter of 2027.

Kevin Latek: Once again, Gray has completed a retrans renewal cycle without a single public dispute impacting our business, the distributors' business, or our mutual customers. We value the collaborative approach with our retrans partners to secure continued distribution of our strong telecommunications without interruption. Importantly, Gray obtained the necessary rate increases and terms that reflect the formidable value that the content our stations deliver to these distributors.

Speaker Change: Once again, Gray has completed a retrans-renewal cycle without a single public dispute impacting our business, the distributor's business, or our mutual customers.

Kevin Latek: We value the collaborative approach with our retrans partners to secure continued distribution of our strong telecommunications without interruption, reportedly engraved in hand with necessary raiding creases and terms that reflect the formidable value of the content our stations deliver to these distributors. We remain optimistic that the pace of sub declines will slow going forward. This is a result of the addition of more streaming apps to MVPD bundles, proliferation of ads and price increases in streaming products, more MVPD control over the carriage and payment for the Little Watch cable channel, and the Migration of Sports to Broadcast Networks and Local Stations. To date, however, the traditional MVPD subscriber base has continued to decline this year at about the same pace as last year. This is in contrast to our more optimistic expectations earlier this year.

Kevin Latek: We value the collaborative approach with our retrans partners to secure continued distribution of our strong telecommunications without interruption. Reportedly, Gray obtained unnecessary rate increases in terms that reflect the formidable value that the content our stations deliver to these distributors. We remain optimistic that the pace of sub declines will slow, going forward. This is a result of the addition of more streaming apps to MVPD Bundles, proliferation of ads and price increases in streaming products.

Operator: Welcome, ladies and gentlemen, to the Gray Media Conference call. If you know you'd like to ask a question, you may do so at any time during the call by pressing star one on your telephone keypad. Once again, that star one on your telephone keypad to join the question queue.

Speaker Change: We value the collaborative approach with our ReTrans partners to secure continued distribution of our strong telecommunications without interruption.

Speaker Change: Importantly, Gray obtained the necessary rate increases and terms that reflect the formidable value that the content our stations deliver to these distributors.

Kevin Latek: We remain optimistic that the pace of sub declines will slow going forward. This is a result of the addition of more streaming apps to MVPD bundles, proliferation of ads and price increases in streaming products, more MVPD control over the carriage and payment for the Little Watch cable channel, and the Migration of Sports to Broadcast Networks and Local Stations. To date, however, the traditional MVPD subscriber base has continued to decline this year at about the same pace as last year. This is in contrast to our more optimistic expectations earlier this year.

Hilton Howell: And without further ado, I will now turn the program over to our chairman and CEO, Hilton Howell Jr. Thanks, you operator. Good morning, everyone. As the operator mentioned, I'm Hilton Howell, the chairman and CEO of Gray Television. Thank you all for joining our second 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, and Jeff Gignac, who succeeded Jim Ryan as our chief financial officer on the first of July.

Speaker Change: We remain optimistic that the pace of sub-declines will slow going forward. This is a result of the addition of more streaming apps to MVPD bundles.

Kevin Latek: More MBPD control over the carers and payment for the Little Watch cable channel, and the Migration of Sports to Broadcast Networks and Local Stations. To date, however, Traditional MVPD subscriber base has continued to decline this year at about the same pace as last year. This is in contrast to our more optimistic expectations earlier this year.

Sandy Breland: The Proliferation of Ads and Price Increases in Streaming Products

Sandy Breland: More MVPD control over the carriage and payment for the Little Watch cable channels. And the migration of sports to broadcast networks and local stations.

Sandy Breland: To date, however, traditional MVPD subscriber base has continued to decline this year at about the same pace as last year. This is in contrast to our more optimistic expectations earlier this year.

Jeff Gignac: Given these experiences through the first half of 2024, we are bringing our guidance for full-year retransmission down by about 3% to approximately $1.475 billion. We continue to anticipate network affiliation fees of approximately $935 million for the year, essentially in line with last year's amount. As a reminder, we will be negotiating new affiliation agreements with each of the big four networks over the next 18 months. The networks see the same trends we do, and we know that they also see the same value to their businesses that only strong local affiliates can provide.

Kevin Latek: Given these experiences through the first half of 2024, we are bringing our guidance for full-year retransmission down by about 3%, to approximately $1.475 billion. We continue to anticipate network affiliation fees of approximately $935 million for the year, essentially in line with last year's amount. As a reminder, we will be negotiating new affiliation agreements with each of the big four networks over the next 18 months. The networks see the same trends we do and we know that they also see the same value to their businesses that only strong local affiliates can provide.

Kevin Latek: Given these experiences through the first half of 2024, we are bringing our guidance for full-year retransmission down by about 3% to approximately $1.475 billion. We continue to anticipate network affiliation fees of approximately $935 million for the year, essentially in line with last year's amount. As a reminder, we will be negotiating new affiliation agreements with each of the big four networks over the next 18 months. The networks see the same trends we do, and we know that they also see the same value to their businesses that only strong local affiliates can provide.

Kevin Latek: As usual, we will begin with the disclaimer that Kevin will provide. Thank you, Hilton. Good morning, everyone. Gray Television, commonly known as Gray Media or Gray, uses its website as a key source of company information. The website address is www. GRAYMEDIA.com. We will file our quarterly report on form 10Q with the SEC today. We issued an updated investor presentation this morning that can be found on our website under investor relations. Included on the call may be a discussion of non-gap financial measures, and in particular, Justin Evada, leverage ratio denominator and certain leverage ratios.

Sandy Breland: Given these experiences through the first half of 2024, we are bringing our guidance for full-year retransmission down by about 3%.

Sandy Breland: up to approximately 1.475 billion dollars.

Sandy Breland: We continue to anticipate network affiliation fees of approximately nine hundred and thirty five million dollars for the year essentially in line with last year's amount

Sandy Breland: As a reminder, we will be negotiating new affiliation agreements with each of the Big Four networks over the next 18 months.

Kevin Latek: These metrics are not meant to replace gap measurements, but are provided as supplements to assist the public and the analysis and valuation of our company. Included in our earnings release, as well as posted on our website, are reconciliation to these financial measures to the gap measures reported in our financial statements. The certain matters discussed on this call may include portal king statements regarding among other things, future operating results. Those statements are subject to a number of risks and uncertainties.

Sandy Breland: The networks see the same trends we do, and we know that they also see the same value to their businesses that only strong local affiliates can provide.

Jeff Gignac: We will not get into details or specifics of our network affiliation agreements, which remain strictly confidential. What we can tell you is that Gray has been and will remain committed to adjusting the network cost side of the retransmission equation to ensure that they reflect the significant changes to the television ecosystem that have occurred over the past few years. This concludes my remarks, and I turn the call now to Jeff.

Kevin Latek: We will not get into details or specifics of our network affiliation agreements, which remain strictly confidential. What we can tell you is that Gray has been and will remain committed to adjusting the network cost side of the retransmission equation, to ensure that they reflect the significant changes to the television ecosystem that have occurred over the past few years. This concludes my remarks and I turn the call now to Jeff.

Kevin Latek: We will not get into details or specifics of our network affiliation agreements, which remain strictly confidential. What we can tell you is that Gray has been and will remain committed to adjusting the network cost side of the retransmission equation to ensure that they reflect the significant changes to the television ecosystem that have occurred over the past few years. This concludes my remarks, and I turn the call now to Jeff.

Jeff Gignac: We will not get into details or specifics of our network affiliation agreements, which remain strictly confidential.

Sandy Breland: What we can tell you is that Gray has been and will remain committed to adjusting the network cost side of the retransmission equation to ensure that they reflect the significant changes to the television ecosystem that have occurred over the past few years.

Kevin Latek: After results in the future, it could differ from those expressed or implied in any portal king statements as a result of various important factors that have been set forth in companies most recent reports by the SEC, including our most recent quarterly report on form 10Q and our most recent earnings release.

Jeff Gignac: Thanks, Kevin. Hilton and Pat covered the key financial highlights of the quarter, which are detailed in the earnings release and the 10-Q. I'll therefore focus most of my remarks on the big improvements we made recently to our balance sheet. But first, I'd like to point out that, as Hilton mentioned, our adjusted EBITDA for Q2 came in at $225 million. This exceeded our expectations as our operating expenses were $17 million below the low end of our guidance range of $624 million.

Jeff Gignac: Thanks, Kevin. Hilton and Pat covered the key financial highlights of the quarter, which are detailed in the earnings release and the 10Q. I'll therefore focus most of my remarks on the big improvements we made recently to our balance sheet. But first, I'd like to point out that, as Hilton mentioned, our adjusted EBITDA for Q2 came in at $225 million. This exceeded our expectations as our operating expenses were $17 million below the low end of our guidance range of $624 million.

Sandy Breland: This concludes my remarks and I turn the call now to Jeff.

Speaker Change: thanks ketherin ilman f covered the key financial highlights of the quarter which are detailed in the earnings release in the ten -q

Jeff Janiak: I'll therefore focus most of my remarks on the big improvements we made recently to our balance sheet. But first, I'd like to point out that, as Hilton mentioned,

Hilton Howell: our adjusted ebitda for q two came in at two hundred and twenty-five million this succeed our expectations as our operating expenses were seventeen million below the low end of our guidance range of six hundred and twenty-four million

Hilton Howell: The company undertakes no obligation to update these portal king statements, and I now turn the call to Hilton. Thank you, Kevin.

Jeff Gignac: During the quarter, we capitalized on receptive debt market conditions to extend 1.85 billion of our 2026 maturities. We also increased our revolving credit facility commitments to $680 million, all of which is due on December 31, 2027. This financing provides us with a clear line of sight to addressing our 2027 notes maturity, using on balance sheet liquidity and the significant cash flow we expect to generate later this year and again in 2026. We sincerely appreciate the banks in our lending group that have stood by us for many years, as well as those who have joined our lending group in the last few months.

Jeff Gignac: During the quarter-week, Capitalizing on receptive death market conditions to extend 1.85 billion of our 2026 maturitys, we also increased our revolving credit facility commitments to $680 million, all of which is due on December 31, 2027. This financing provides us with a clear line of sight to addressing our 2027 notes maturity, using on balance sheet liquidity and the significant cash flow we expect to generate later this year and again in 2026. We sincerely appreciate the banks in our lending group that have stood by us for many years, as well as those who have joined our lending group in the last few months.

Jeff Gignac: During the quarter we capitalized on receptive debt market conditions to extend 1.85 billion of our 2026 maturities. We also increased our revolving credit facility commitments to $680 million, all of which is due on December 31, 2027. This financing provides us with clear line of sight to addressing our 2027 notes maturity, using on-balance seat liquidity and the significant cash flow we expect to generate later this year and again in 2026. We sincerely appreciate the banks in our lending group that have stood by us for many years, as well as those who joined our lending group in the last few months.

Hilton Howell: As usual, there was no slowing down this summer for gray. We certainly packed a lot of very exciting innovation, collaboration, and straightforward quality journalism into the last couple of months. Our local news stations and our production companies are performing at the top of their game. Our financial results evidence the success as much as the fantastic award-winning work of several stations that have been recognized over just the past few months. From the investigative reporters and editors, the National Association of Broadcasters Leadership Foundation, the Mental Health America Association, and the Society of Professional Journalists.

Speaker Change: During the quarter, we capitalized on receptive debt market conditions to extend $1.85 billion of our 2026 maturities. We also increased our revolving credit facility commitments to $680 million, all of which is due on December 31, 2027.

Jeff Gignac: this financing provides us with clear line of site to addressing our two thousand and twenty-seven notes maturity

Jeff Gignac: Using on-balance sheet liquidity and the significant cash flow we expect to generate later this year and again in 2026.

Speaker Change: We sincerely appreciate the banks in our lending group that have stood by us for many years as well as those who joined our lending group in the last few months.

Jeff Gignac: We also sincerely appreciate the support of the many investors who understood our business and our plans and followed through with very strong commitments to purchase our new Senior Secured Loan and our new Senior Secured Note. As Hilton mentioned earlier, reducing debt and leverage remains our top capital allocation priority.

Hilton Howell: We are honored to work with dedicated employees at every level of this company, and we congratulate all those involved on these award-winning projects who are making a real impact with investigative journalism, one-storing at a time. Gray is also continuing to expand our concept and reach in many ways, from the announcement of our upcoming live broadcast of the Harlem Glory Trotters game on August the 18th, which will be produced by our subsidiary Raycom Sports to the launching of new networks like Rock Entertainment Sports Network in Ohio and Palmetto Sports and Entertainment in South Carolina. We are constantly looking for ways to entertain and inform our viewers.

Sandy Breland: We also sincerely appreciate the support of the many investors who understood our business and our plans and followed through with very strong commitments to purchase our new senior secured loan and our new senior secured notes.

Jeff Gignac: And to that end, following the completion of the refinancing in Q2, we retired 50 million of our 2027 notes via open market repurchases at an average price of approximately 90.5% apart. Subsequent to quarter end in July, we acquired an additional 29 million a face value of the 2027 notes at just over 92% of par. As of August 7th, we have $178 million remaining under the previously announced $250 million open market purchase program, and we'll continue to monitor market conditions for additional open market repurchase opportunities.

Jeff Gignac: And to that end, following the completion of the refinancing in Q2, we retired 50 million of our 2027 notes via open market repurchases at an average price of approximately 90.5%. Subsequent to quarter end in July, we acquired an additional 29 million face value of the 2027 notes at just over 92% of par. As of August 7th, we have $178 million remaining under the previously announced $250 million open market purchase program, and we'll continue to monitor market conditions for additional open market repurchase opportunities.

Jeff Gignac: And to that end, following the completion of the refinancing in Q2, we retired 50 million of our 2027 notes via open market repurchases at an average price of approximately 90 and a half percent. Subsequent to quarter end in July, we acquired an additional 29 million face value of the 2027 notes at just over 92% of par. As of August 7, we have $178 million remaining under the previously announced $250 million open market purchase program and will continue to monitor market conditions for additional open market repurchase opportunities.

philple: as philple mentioned earlier reducing debt and leverage remains our top capital allocation priority

Speaker Change: And to that end, following the completion of the refinancing in Q2, we retired 50 million of our 2027 notes via open market repurchases at an average price of approximately 90.5% apart.

Speaker Change: Subsequent to Quarter End, in July , we acquired an additional $29 million of face value of the 2027 notes at just over 92% of par.

Hilton Howell: With this backdrop, I'm personally pleased to review our second quarter's results for our company with you today. Our total revenue in the second quarter was $826 million, an increase of 2% from the second quarter of 2023. Met income was $22 million in the second quarter compared to $4 million in the second quarter of 2023. Adjusted at the dog was $225 million, essentially unchanged from the second quarter last year. Our core advertising revenue in the second quarter was $373 million, which was slightly below the low end of our guidance range.

Jeff Gignac: As of August 7th, we have $178 million remaining under the previously announced $250 million open market purchase program, and we'll continue to monitor market conditions for additional open market repurchase opportunities.

Jeff Gignac: Furthermore, our strong cash flow generation in July allowed us to repay $75 million of our revolver on August 1st, leaving $125 million currently drawn. As of August 7th, that leaves us with available liquidity of over $600 million from cash on hand and undrawn revolver control. Depending on the timing of additional open market repurchase activities, we currently expect to fully repay our revolver by quarter end. One last item I'd like to point out is that our leverage metrics did kick up slightly from Q1 to Q2.

Jeff Gignac: Further, our strong cash flow generation in July allowed us to repay $75 million of our revolver on August 1st, leaving $125 million currently drawn. As of August 7th, that leaves us with available liquidity of over $600 million from cash on hand and undrawn revolver control. Depending on the timing of additional open market repurchase activities, we currently expect to fully repay our revolver by quarter-f. One last item I'd like to point out is that our leverage metrics did kick up slightly from Q1 to Q2.

Jeff Gignac: Further, our strong cash flow generation in July allowed us to repay $75 million of our revolver on August 1st, leaving $125 million currently drawn. As of August 7th, that leaves us with available liquidity of over $600 million from cash on hand and undrawn revolver. Depending on the timing of additional open market repurchase activities, we currently expect to fully repay our revolver by quarter end. One last item I'd like to point out is that our leverage metrics did kick up slightly from Q1 to Q2.

Speaker Change: further our strong cash flow generation in july allowed us to rerepay seventy-five million dollars of our revolver on august first leaving one hundred twenty-five million dollars currently drawn

Sandy Breland: As of August 7th, that leaves us with available liquidity of over $600 million from cash on hand and undrawn revolver capacity.

Sandy Breland: Depending on the timing of additional open market repurchase activities we currently expect to fully repay our revolver by quarter end.

Hilton Howell: To be specific, our core advertising revenue was about $5.7 million less than 2023's result, but please remember that Q2 in 2023 was an exceptionally strong 4% ahead of 2022's results. So all in all, we feel quite good with where we are. Political advertising revenue in the second quarter was $47 million, when it combines historical basis, which includes the results of our acquired stations and excludes the results of our divested stations. Our second quarter political ad revenues, blue by the second quarter of 2020, the last presidential election year, by whopping 62%.

Jeff Gignac: This was expected and is mostly related to the timing of our refinancing, as we paid fees and expenses related to the refinancing and had to settle interest on the 2026 notes tender offer prior to quarter end. The other notable factor is the leverage ratio denominator.

Speaker Change: One last item I'd like to point out is that our leverage metrics did kick up slightly from Q1 to Q2.

Speaker Change: This was expected and is mostly related to the timing of our refinancing as we paid fees and expenses related to the refinancing and had to settle interest on the 2026 notes tender offer prior to quarter end.

Hilton Howell: On that side, we have on that side of the equation, we have a timing swing related to political revenue. In Q2 of 22, the quarter that's rolling out of our eight-quarter calculation, political revenue was $90 million. In Q2 of 24, political was 47 million. Our guidance for year-to-date political through Q3-24 indicates that we expect Q3 to approximate our year-to-date 22 and 2020 political, which will normalize the denominator in our calculation and align with third-quarter cash flows. This concludes my remarks, and I'll turn the call back over to Holt. Thank you very much.

Jeff Gignac: On that side, we have on that side of the equation, we have a timing swing related to political revenue. In Q2 of 22, the quarter that's rolling out of our eight quarter calculation, political was $90 million. In Q2 of 24, political was 47 million. Our guidance for year-to-date political through Q3-24 indicates that we expect Q3 to approximate our year-to-date 22 and 2020 political, which will normalize the denominator in our calculation and align with third-quarter cash flows. This concludes my remarks, and I'll turn the call back over to Holt. Thank you very much.

Jeff Gignac: On that side of the equation, we have a timing swing related to political revenue. In Q2 of 22, the quarter that's rolling out of our eighth quarter calculation, political revenue was $90 million. In Q2 of 24, political was 47 million. Our guidance for year-to-date political through Q3-24 indicates that we expect Q3 to approximate our year-to-date 22 and 2020 political, which will normalize the denominator in our calculation and align with third quarter cash flows. This concludes my remarks, and I'll turn the call back over to Holt. Thank you very much.

Speaker Change: The other notable factor is on the leverage ratio denominator.

Hilton Howell: Thank you very much.

Hilton Howell: On that side we have, on that side of the equation, we have a timing swing related to political revenue.

Speaker Change: In Q2 of 22, the quarter that's rolling out of our 8th quarter calculation, political was $90 million. In Q2 of 24, political was $47 million.

Speaker Change: Our guidance for year-to-date political through Q3-24 indicates that we expect Q3 to approximate

Hilton Howell: As you may have seen in this morning's earnings release, we are lowering our full revenue guide by 75 million for core ad revenue and 25 million for retransmission revenue. These adjustments reflect our current expectations for a continuing, healthy, locally climbing, continuing, growing digital ad business, continuing strong political revenues and a significant amount of political displacement. At the same time, we are continuing to carefully review all of our opportunities to increase revenue, reduce expenses, even more intensely than this already efficient company always does.

Hilton Howell: Q3 to approximate our year-to-date 22 and 2020 political.

Hilton Howell: which will normalize the denominator in our calculation and align with third quarter cash flows.

Operator: Thank you very much. Operator, at this time, would like to open up the call for any questions anyone may have.

Hilton Howell: Thank you very much. Operator, at this time, would like to open up the call for any questions.

Speaker Change: This concludes my remarks and I'll turn the call back over to Hilton. Thank you very much. Operator, at this time, would like to open up the call for any questions anyone may have.

Operator: All right. Once again, ladies and gentlemen, please press star 1 on your telephone keypad if you'd like to join the question queue. And I think we have several in queue so far. It looks like our first question will come from Daniel Kurnos of Benchmark.

Operator: All right. Once again, ladies and gentlemen, please press star 1 on your telephone keypad if you'd like to join the question queue. Press star 1 on your telephone keypad if you would like to join the queue. And I think we have several in queue so far. It looks like our first question will come from Daniel Kurnos of Benchmark.

Speaker Change: All right. Once again, ladies and gentlemen, please press star one on your telephone keypad if you'd like to join the question queue. Press star one on your telephone keypad if you would like to join the queue.

Hilton Howell: Meanwhile, we have really good news to share on Assembly Atlanta. Last week, the IOTC and Teamsters unions ratified new collective bargaining agreements that covered the important trade and craft workers in the film and television production industry. With the risk of another Hollywood strike averted, we are now busy, again, lining up film and television and production farce our sound stages and related facilities here in Atlanta. In fact, we already signed our first long-term studio lease for multiple stages within the portion of assembly studios that are not leased by NBC Universal.

Speaker Change: And seeing we have several in queue so far, it looks like our first question will come from Daniel Kurnos of Benchmark State.

Daniel Kurnos: Great. Thanks, good morning.

Daniel Kurnos: Great, thanks. Good morning.

Speaker Change: Great, thanks, good morning. Three, if I could, just first on political, you know, third party sources have already taken up.

Speaker Change: estimates for the year pretty substantial even before you know the transition and the Democratic Party of who's running and the peers your peers at let's just say at least X runoff

Speaker Change: are now all calling for records. I know that visibility super limited in July was slow, obviously, until Biden dropped out of the race, but just

Pat LaPlatney: Three if I could just first on political, you know, third party sources have already taken up estimates for the year, pretty substantial, even before, you know, the transition and the democratic party of whose running. And the peers, your peers, let's say at least X run off are now all calling for records. I know that visibility is super limited in July with slow obviously until Biden dropped out of the race. But [inaudible] What can you guys give us any update? I assume you guys think you're going to take political market share here. I just want to gauge your level of confidence relative to 2020 here on how this might

Unknown Executive: Three, if I could, just first on politics, third-party sources have already taken up estimates for the year, pretty substantial, even before the transition and the Democratic Party of who's running. And the peers, your peers, at, let's say, at least the X runoff, are now all calling for records. I know that visibility is super limited.

unknown: Three, if I could, just first on politics, third-party sources have already taken up estimates for the year, pretty substantial, even before the transition and the Democratic Party of who's running. And the peers, your peers, at, let's say, at least the x runoff, are now all calling for records. I know that visibility was super limited in July was slow, obviously, until Biden dropped out of the race. But just Can you guys give us any update? I assume you guys think you're going to take political market share here. I just want to gauge your level of confidence relative to 2020 on how this might work.

Daniel Kurnos: July was slow, obviously, until Biden dropped out of the race. But just. Can you guys give us any update? I assume you guys think you're going to take political market share here. I just want to gauge your level of confidence relative to 2020 here on how this might affect you.

Hilton Howell: Last week, great entered into a lease with one of the major studio companies for the full suite of facilities needed to support a new high-quality, episodic television drama for one of the big floor broadcast networks. Our own stations that are affiliates of that network will actually start airing this new network show early next year. We are sincerely thrilled to welcome this production to the Atlanta Metro area and to our world-class studio production complex at Assembly Atlanta. And we expect it to be a mutually beneficial long-term relationship.

unknown: what can you guys give us any update I assume you guys think you're going to take political market share here I just want to get gauge your level of confidence relative to 2020 here on how this might play out

Unknown Executive: I think we're all pretty optimistic about politics, but I think we've also been crystal clear that we're not going to give a guide for the full year. So we provided a pretty strong guide for Q3 that puts Q3 at the same spot as 2020. And I run, and also, for what it's worth, the same spot is 2022, despite the fact we didn't have thirty million dollars of presidential primary money.

unknown: I think we're all pretty optimistic about politics, but I think we've also been crystal clear that we're not going to give a guide for the full year. So we provided a pretty strong guide for Q3 that puts Q3 in the same spot as 2020. And also, for what it's worth, in the same spot as 2022, despite the fact we didn't have 30 million dollars of presidential primary money.

Pat LaPlatney: I think we're all pretty optimistic on political, but I think we've also been crystal clear that we're not going to give a guide for the for a full year. So we provided a pretty strong guide for Q3 that puts Q3 at the same spot as 2020. And I run and also for what it's worth, same spot is 2022, despite the fact we didn't have 30 million dollars of presidential primary money.

Speaker Change: I think we're all pretty optimistic on political, but I think we've also been crystal clear that we're not going to give a guide for the full year.

Speaker Change: So we provided a pretty strong guide for Q3.

Speaker Change: that puts q three at the same spot is two thousand and twenty

Speaker Change: And also, for what it's worth, same spot as 2022, despite the fact we didn't have $30 million of presidential primary money.

unknown: But we're going to leave it to everyone else to make their predictions on what Q4 is going to be like and what the full year will be. But we're very optimistic. We're seeing lots of good signs, but we're not going to put a number out.

Unknown Executive: But we're going to leave it to everyone else to make their predictions on what Q4 is going to be like and what the full year will be. But we're very optimistic. We're seeing lots of good signs, but we're not going to put a number out.

Hilton Howell: Well, we are proud of our recent and anticipated operational achievements.

Hilton Howell: The most significant activity for Greg in the second quarter was undoubtedly the successful refinancing of our 2026 debt maturities. In particular, we extended almost $2 billion of debt maturities to 2029, while also increasing our revolving credit facility to 680 million. As a result of these efforts, we no longer have material near-term material. Through smart execution of the business, including increased efforts to raise revenues and thoughtful decisions around reducing costs and capital expenditures, which then expect to generate significant pre-cash flow later this year and through 2026 that can and will be used to repurchase and pay off debt.

Hilton Howell: Ben, and I hope you understand that, but I will tell you, everybody here is extremely bullish on political for this entire year. You know, we've only got 90-something days to the election, and in some states, they start voting in about 30 days. And so we're seeing a tremendous amount of political advertising that is coming in, and we expect it to be a really good year.

Unknown Executive: Dan and I hope you understand that, but I will tell you everybody here is extremely bullish on politics for this entire year. You know we've only got 90-something days to the election, and in some states they start voting in about 30 days. And so we're seeing a tremendous amount of political advertising that is coming in, and we expect it to be a really good year.

unknown: Ben, and I hope you understand that, but I will tell you, everybody here is extremely bullish on politics for this entire year. You know, we've only got 90-something days to the election, and in some states, they start voting in about 30 days. And so we're seeing a tremendous amount of political advertising that is coming in, and we expect it to be a really good year.

Hilton Howell: As Jeff Gignac will soon explain in his remarks, we began open market repurchases of our 2027 notes immediately after the closing of our refinancing and that effort continues into this quarter. Reducing debt and leverage remains our top capital allocation for organizing. We have said this now for a few quarters and we will continue to reiterate this guiding principle until our debt and leverage comes back down to our usual more comfortable levels.

Speaker Change: Ben, and I hope you understand that, but I will tell you, everybody here is extremely bullish on political for this entire year. You know, we've only got 90-something days to the election, and in some states, they start voting in about 30 days.

unknown: And so we're seeing a tremendous amount of political advertising that is coming in and we expect it to be a really good year.

Daniel Kurnos: Okay, fair enough. Housekeeping, Kevin, when are the networks? Not one will ask for terms; just when are the network renewals up?

Kevin Latek: Okay, fair enough. Housekeeping, Kevin, when are the networks? Not one will ask for terms; just when are the network renewals up?

Kevin Latek: Okay, fair enough. Housekeeping, Kevin, when are the networks? Not one ask for terms, just when are the network renewals up?

Speaker Change: Okay, fair enough. Housekeeping, Kevin, when are the network, I won't ask returns, just when are the network renewals up?

Kevin Latek: We have all the network renewals up in the next 18 months. There's a schedule in our investor deck from March that lists them out by network.

Kevin Latek: We have all the network renewals up for the next 18 months. There's a schedule in our investor deck from March that lists them out by network.

unknown: We have all the network renewals up for the next 18 months. There's a schedule in our investor deck from March that lists them out by network.

Kevin Latek: We have all the network renewals up in the next 18 months. There's a schedule in our investor deck from March that lists them out by network.

Daniel Kurnos: And then Hilton, just on assembly, any way to kind of gauge your optimism about how the cash flow evolves from here and how you're thinking about, you know, kind of the payback now that you guys have most of the cost sunk? Well, as you know, we

Hilton Howell: And then Hilton, just on assembly, any way to kind of gauge your optimism about how the cash flow evolves from here and how you're thinking about, you know, kind of the payback now that you guys have most of the cost sunk? Well, as you know, we

Hilton Howell: Well, as you know, the studios are built, all right, and they were profitable from day one. The conclusion, as I mentioned in our prepared remarks, getting IOTSE and the Teamsters unions and the full votes behind everyone has really put a lot of wind in the sails. And in fact, I meet this afternoon after this call with individuals that are coming in to look at studios that are really prominent folks in this business. It's unbelievable how quickly things have turned out.

Hilton Howell: Well, as you know, the studios are built, all right, and they were profitable from day one, with the conclusion, as I mentioned in our prepared remarks, you know, getting IOTSE and the Teamsters unions and the full votes behind everyone has really put a lot of wind in the sails. And in fact, I meet this afternoon after this call with individuals that are coming in to look at studios that are really prominent folks in this business. It's unbelievable how quickly things turned.

Hilton Howell: Well, as you know, the studios are built, all right, and they were profitable from day one with the conclusion, as I mentioned in our prepared remarks.

Hilton Howell: More importantly than pleasureing our support for reducing leverage, you will continue to see Greg doing what it said it would do on this critical topic as well as every other regard.

Speaker Change: You know, getting IOTC and the Teamsters unions and the full votes behind everyone has really put a lot of wind in the sails. And in fact, I meet this afternoon after this call.

Pat LaPlatney: Pat and the rest of the team will now provide some more color around our recent experiences and upcoming opportunities. Thanks, Elton. Our core advertising revenues started the second quarter strong, the tailed off a little in June. In the end, the 2024 second quarter ad revenues are about a point and a half less than 2023.

Operator: We have secured, and you know, Gray, we like to make sure we have our I's dotted and T's crossed before we talk about things. But we have secured a very solid lease with a very important client that we're very, very proud of that is actually operating right now. And so we expect all of our studios to be leased out in the fairly near future. All right, next up we have James Goss of Arrington Research. Okay, thanks. One question I have is about the local area.

Hilton Howell: We have secured, and you know, Gray, we like to make sure we have our I's dotted and T's crossed before we talk about things. But we have secured a very solid lease with a very important client that we're very, very proud of that is actually operating right now. And so we expect all of our studios to be leased up in the fairly near future.

Speaker Change: with individuals that are coming in to look at studios that are really prominent folks in this business.

Speaker Change: It's unbelievable how quickly things turned.

Pat LaPlatney: For context, core of the second quarter of this year did not include about 5 million revenues attributable to the NCAA final four games that we broadcast in 23 but did not have in 24. And as Elton mentioned, we were working against a pretty tough comp at plus four from 22 of 23. Looking ahead to third quarter of 24, we expect core will be flat to upload single-digit percentages compared to the third quarter of 23 driven primarily by the Olympics which are proving to be an extraordinary event for both viewers and advertisers.

Gray: We have secured, and you know Gray, we like to make sure we have our I's dotted and T's crossed before we talk about things. But we have secured a very solid lease with a very important client that we're very, very proud of.

Hilton Howell: that is actually operating right now. And so we expect all of our studios to be leased up in the fairly near future.

James Goss: All right, next up, we have James Goss of Arrington Research. Okay.

Operator: All right, next up, we have James Goss of Arrington Research.

James Goss: All right, next up we have James Goss of Arrington Research.

Sandy Breland: Okay, thanks. One question I have is about local sports. You know, you've always been involved a lot into it, especially with Raycon, and you and your peers have been leaning even more into that in recent years. I wonder if you might talk any more about the approach you might take to identify additional ways you can be involved, since that's obviously a clearly attractive way to keep people in the broadcast area. Yeah, I think that, you know, we

James Goss: Okay, thanks. One question I have is about local sports. You know, you've always been involved a lot in it, especially with Raycon. And you and your peers have been leaning even more into that in recent years. And I wonder if you might talk any more about the approach you might take to identify additional ways you can be involved since that's obviously a clearly attractive way to keep people in the broadcast area. Yeah, I think that, you know, we

Speaker Change: All right, next up we have James Goss of Arrington Research.

Pat LaPlatney: We currently anticipate that our 56 embassy affiliates, the cover about 11% of US homes, will generate approximately 19 million of Olympic advertising revenue in the third quarter. And for those of you wondering, some of that is political. Obviously, core will be impacted by displacement from strong political demand as we move through the third quarter of 24, especially in September. This placement is likely to be more impactful this year than we originally expected with political ad revenue arriving later in the year in a more compact window forcing us to displace more commercial ads to make room for political ads.

James Goss: okay thanks

James Goss: one one question i have is about local sports

James Goss: You know, you've always been involved a lot.

Speaker Change: into it, especially with Raycon.

Speaker Change: And you and your peers have been leaning even more into...

James Goss: I wonder if you might talk any more about the approach you might take to identify additional ways you can be involved since that's obviously a clearly attractive way to keep people in the broadcast area.

Unknown Executive: Yeah, I think that we've been really clear that we're interested in doing more local sports partnerships. We just concluded our first year with the Phoenix Suns, and it was extremely successful. We are happy with how it's going, and so is the team.

unknown: Yeah, I think that we've been really clear that we're interested in doing more local sports partnerships. We just concluded our first year with the Phoenix Suns, and it was extremely successful. We are happy with how it's going, and so is the team.

Sandy Breland: Yeah, I think that, you know, we've been really clear that we're interested in doing more local sports partnerships. We had a just concluded our first year with the Phoenix Suns, extremely successful, we are happy with how it's going. So is the team.

Speaker Change: Yeah, I think that, you know, we've been really clear that we're interested in doing more local sports partnerships. We had a, just concluded our first year with the Phoenix Suns, extremely successful. We are happy with how it's going, so is the team. We're working currently with four NBA teams, the Atlanta Dream, the Las Vegas Aces, the Phoenix Mercury, and through a partnership with Tegna, the Indiana Fever, in several markets, and we're happy with how that's going as well. I mean, it's a great local sports and local news, or a great combination, and, you know, the teams that we're working with are seeing that increased distribution and reach, and so we are absolutely interested and have, you know, shared with you guys on multiple calls that we are

Sandy Breland: We're working currently with four NBA teams, the Atlanta Dream, the Las Vegas Aces, the Phoenix Mercury, and through a partnership with Tegna, the Indiana Fever in several markets. And we're happy with how that's going as well. I mean, it's a great local sports and local news are a great combination. And, you know, the teams that we're working with are seeing that increased distribution and reach. And so we are absolutely interested and have, you know, shared with you guys on multiple calls that we are working on additional partnerships. And as I've said, we hope to have some really exciting news soon.

Unknown Executive: We're currently working with four NBA teams, the Atlanta Dream, the Las Vegas Aces, the Phoenix Mercury, and, through a partnership with Tegna, the Indiana Fever in several markets. And we're happy with how that's going as well. I mean, it's a great local sports and local news combination. And, you know, the teams that we're working with are seeing that increased distribution and reach. And so we are absolutely interested and have, you know, shared with you guys on multiple calls that we are working on additional partnerships.

unknown: We're currently working with four NBA teams, the Atlanta Dream, the Las Vegas Aces, the Phoenix Mercury, and, through a partnership with Tegna, the Indiana Fever in several markets. And we're happy with how that's going as well. I mean, it's a great local sports and local news combination. And, you know, the teams that we're working with are seeing that increased distribution and reach. And so we are absolutely interested and have, you know, shared with you guys on multiple calls that we are working on additional partnerships. And, as I've said, we hope to have some really exciting news soon.

Pat LaPlatney: Constantly, as we consider possible ranges of core and political ad revenues in the fourth quarter, we determine that it would be prudent to reduce our internal forecast for core in the fourth As a result of that decision, we today reduced our four-year guide for a core from 1.6 billion to 1.525 days. It's important to remember that we reduced our four-year 2024 guide for broadcast operating expenses by 50 million on our last earnings call.

Pat LaPlatney: Today, we are lowering our guidance for broadcast op-ex and corporate admin expenses for the four-year, by an additional 20 million, and our capital expense range by another approximately 20 million. While Gray has made good progress managing costs in expenses this year, we are redoubling our efforts to find thoughtful ways to reduce operating capital expenses. We are continuing to lean on our strong in-house sales training programs in our less relentless effort in developing new local direct business, which is essentially our local sales force finding a customer that's new to Gray.

Speaker Change: Working on additional partnerships, and as I said, we hope to have some really exciting news soon.

Operator: Okay, great. Moving right along. Our next question will come from Craig Huber.

Craig Huber: Okay, great. Moving right along. Our next question will come from Craig Huber. Your line is now.

Operator: Okay, great. Moving right along. Our next question.

Unknown Executive: Great, thank you. My first question is, can you just elaborate a little bit further on your core ad revenue? Talk about it tailing off in the month of June. Do you feel that that was more economically driven or just one or two categories? And whatever you saw in June, what parts of that on the negative side have carried forward into the third quarter? Anything you can comment on there?

Pat LaPlatney: Great, thank you. My first question, can you just elaborate a little bit further on your core ad revenue comment about it tailing off in the month of June? Do you feel that that was more economic driven or is it just one or two categories? And whatever you saw in June, what...

Craig Huber: Great, thank you. My first question is, can you just elaborate a little bit further on your core ad revenue comment about it tailing off in the month of June? Do you feel that that was more economic-driven or is it just one or two categories? And whatever you saw in June, what parts of that on the negative side have carried forward into the third quarter? If you can comment there, please.

Speaker Change: Okay, great. Moving right along. Our next question will come from Craig Huber. Your line is now open.

Craig Huber: Great, thank you. My first question, can you just elaborate a little bit further on your...

Speaker Change: Core Ad Revenue comment about it tailing off in the month of June .

Craig Huber: Do you feel that that was more economic driven or is it just one or two categories? And whatever you saw in June, what parts that on the negative side carried forward into the third quarter? Anything you can comment there, please.

Pat LaPlatney: In the second quarter, we continue to break records again, by again, posting a double-digit percentage revenue increase for new local direct business over the second quarter of 23. These strong results continued in the July of 24, which delivered 20% more new local direct business than July of 23, some of which is likely attributable to the Olympics on our NBC stations. Our digital businesses are also continuing to grow audience and revenues. In the second quarter, we once again sent new records for engagement, as well as double-digit growth in the number of digital advertisers and in total digital revenue, which we include in core ad revenue.

Pat LaPlatney: Yes, Pat, I would, I would say, you know, it was primarily driven by auto, chilling off at the end of the second. In the third quarter, our auto business is... Down mid-single digits, you know, although we've seen it up to here in the last couple of weeks, possibly due to the Olympics. So look, in terms of the broader economic outlook, I think, we're projecting to be flat to plus three. Things are pretty positive out there.

Pat LaPlatney: Yes, Pat, I would, I would say, you know, it was primarily driven by auto, chilling off at the end of the second. In the third quarter, our auto sales are down mid single digits. You know, although we've seen an uptick here in the last couple of weeks, possibly due to the Olympics. So look, in terms of the broader, you know, economic outlook, I think we're projecting to be flat to plus three.

Pat LaPlatney: Yes, Pat, I would, I would say, you know, it was primarily driven by auto. Chilling off at the end of the, at the end of second. In third quarter, our auto is.., down mid single digits. You know, although we've seen an uptick here in the last couple of weeks, possibly due to the Olympics. So look, in terms of broader, you know, economic outlook, I think We're projecting to be flat to plus three.

Speaker Change: Yes, Pat, I would, I would say, you know, it was primarily driven by auto. Chilling off at the end of the, at the end of second, in third quarter, our auto is...

Speaker Change: Down mid-single digits, you know, although we've seen an uptick here in the last couple of weeks.

Speaker Change: possibly due to the Olympics. So look, in terms of broader, you know, economic outlook, I think

Pat LaPlatney: Things are pretty positive out there. If you look at the long list of categories that we track, we have many more up and down in third quarter and while auto is down and it's a big one, there are other large ones that are up as well.

Pat LaPlatney: It's things are pretty positive out there. If you look at the long list of categories that we track, we have many more up than down in the third quarter. And while the auto industry is down, and it's a big one, there are other large ones that are up as well. So we are, you know, we are pretty bullish as far as Main Street goes in the third quarter. Yeah, I think just to add to that, Pat, too.

Pat LaPlatney: If you look at the long list of categories that we track, we have many more up than down in the third quarter. And while auto is down, and it's a big one, there are other large ones that are up as well.

Pat LaPlatney: We're projecting to be flat to plus three.

Pat LaPlatney: Long list of categories that we track. We have many more up than down in third quarter.

Pat LaPlatney: Our connected TV and fast channel offerings continue to allow finding viewers and attracting advertisers in this important and growing part of the ecosystem. In terms of political advertising revenue through June 30, the first half of the year, our political ad revenues were 74 million compared to the 79 million that we recorded in the first half of 2020, on a combined historical basis. First half 2020, political revenue is benefited from 31 million more in presidential primary outspanning that we achieved in the first half of 2024, otherwise known as the Bloomberg-style effect.

Pat LaPlatney: So we are, you know, we are pretty bullish as far as Main Street goes in the third quarter. Yeah, I think just to add to that, Pat, too, we see that over and over again with our strong performance on New Local Direct and the emphasis we've had there with our really strong sales teams is that we saw an increase in second quarter, again, record setting double digits. And we just finished July with a 20% increase in New Local Direct.

Speaker Change: And while auto is down, and it's a big one, there are other large ones that are up as well. So we are.

Pat LaPlatney: I think just to add to that, Pat, too, we see that over and over again with our strong performance on New Local Direct and the emphasis we've had there with our really strong sales teams. We saw an increase in second quarter, again, record setting of double digits, and we just finished July with a 20% increase in New Local Direct.

Pat LaPlatney: We see, you know, we see that over and over again with our strong performance on New Local Direct and the emphasis we've had there with our really strong sales teams is that we saw an increase in the second quarter, again, record setting double digits. And we just finished July with a 20 percent increase in New Local Direct. All right, next up we have Avi Steiner of JPMorgan. Thank you and good morning. I recognize you're not going to give us a political guide, and so I'm going to turn it over to you.

Pat LaPlatney: You know, we are pretty bullish as far as mainstream goes third quarter. Yeah, I think just to add to that, Pat, too, we see, you know, we see that over and over again with our strong performance on new local direct and the emphasis we've had there with our really strong sales teams. We saw an increase in second quarter, again, record setting of double digits, and we just finished July with a 20% increase in new local direct.

Operator: All right, next up, we have Avi Steiner of J.P. Morgan.

Avi Steiner: All right, next up we have Avi Steiner of J.P. Morgan.

Avi Steiner: All right, next up, we have Avi Steiner of J.P. Morgan.

Avi Steiner: Thank you and good morning. I recognize you're not going to give a political guide and so I'm going to try to ask it a little bit differently if I could. You took revenue down for the full year by $100 million. How much better do you think political has become for Gray since Biden stepped down? And if you don't answer it that way, I think BIA took up their estimates for political spend this year by about 5%. Is that the right way to think about it as they think of offsets for the revenue decline? Thank you.

Avraham Steiner: Thank you and good morning. I recognize you're not going to give us a political guide, and so I'm going to try and ask it a little bit differently if I can. You took revenue down for the full year by $100 million. How much better do you think politics has become for Gray since Biden stepped down? And if you don't answer it that way, I think BIA took up their estimates for political spend this year by about 5%. Is that the right way to think about it as they think of offsets for the revenue decline? Thank you.

Speaker Change: All right, next up we have Avi Steiner of J.P. Morgan.

Pat LaPlatney: We certainly cannot predict where political revenue will end up this year giving the unprecedented nature of this year's presidential race. We are particularly encouraged to see the presidential race since the end of the second quarter become very competitive. An energized race is up and down the ballot, fueling substantially more fund-raising. For these reasons, we continue to anticipate very strong political ad revenues for the four-year.

Avraham Steiner: Thank you and good morning. I recognize you're not going to give a political guide, and so I'm going to try and ask it a little bit differently if I could. You took revenue down for the full year by $100 million.

Avraham Steiner: How much better do you think political has become for Gray since Biden stepped down, and if you don't answer it that way...

Sandy Breland: I now turn the call over to Sandy. Thank you, Pat. We not only have to step on the sales side.

Speaker Change: I think BIA took up their estimates for political spend this year by about 5%.

Pat LaPlatney: Really hard to make that call. I mean, clearly, you know, Biden's stepping back had a significant positive impact, not just on the presidential but right down the ballot. So I look, there's going to be more money out there. But you know, we're not not in a position to really quantify what exactly that is. It's going to be a very good year. Well, we feel really good. And I think this is also

Unknown Executive: Really hard to make that call. I mean, clearly, you know, Biden's stepping back had a significant positive impact, not just on the presidential but right down the ballot. So I look, there's going to be more money out there. But you know, we're not in a position to really quantify what exactly that is. It's going to be a very good year. Well, we don't really know.

unknown: Really hard to make that call. I mean, clearly, you know, Biden's stepping back had a significant positive impact, not just on the presidential level but right down the ballot. So I look, there's going to be more money out there. But, you know, we're not in a position to really quantify what exactly that is. It's going to be a very good year. Well, we feel really good. And I think this is also true.

Sandy Breland: Once again, we served our audiences with high-quality local journalists. Throughout the second quarter, we continued breaking important news stories as well as gathering awards, recognitions, and must importantly audiences as we have been documenting a numerous recent calls and press releases. We are very proud to be investing in local news, weather, and sports, as well as investigative, political, and franchise stories that our local communities want. It is these efforts that allow our great sales teams to provide the advertising solutions that are clearly resonating with businesses in our markets.

Speaker Change: Is that the right way to think about it?

Speaker Change: I think of offsets for the revenue decline.

Speaker Change: Really hard to make that call. I mean, clearly, you know, Biden's stepping back had a significant positive impact, not just on the presidential but right down the ballot. So I look, there's going to be more money out there.

Hilton Howell: Well, we feel really good. And I, this is Hilton. I'd just like to point you to our footprint, because one of the exciting things about Gray in particular is that we have very significant exposure to essentially every single battleground state where this election will be decided at the presidential level, and as well as significant exposure to both gubernatorial and senatorial races that are going to be very competitive. And so while we're not giving a guide, I will reiterate that we are very, very bullish about where we are coming. And I remember last quarter, everybody was asking questions about whether or not we would have any politics at all. But it's going to come in and is coming in at a very rapid rate.

Hilton Howell: Well, we feel really good, and I, this is Hilton, I'd just like to point you to our footprint, because one of the exciting things about Gray in particular, is that we have very significant exposure to essentially every single battleground state where this election will be decided on a presidential level, and as well as significant exposure to both gubernatorial and senatorial races that are going to be very competitive. And so while we're not giving a guide, I will reiterate that we are very, very bullish about where we are coming. And I remember last quarter, everybody's asking questions about whether or not we would have any political at all. But it's going to come in and is coming in at a very rapid rate.

Hilton Howell: Well, we feel really good, and this is Hilton. I'd just like to point you to our footprint, because one of the exciting things about Gray in particular is that we have very significant exposure to essentially every single battleground state where this election will be decided at the presidential level, and as well as significant exposure to both gubernatorial and senatorial races that are going to be very competitive. And so, while we're not giving a guide, I will reiterate that we are very, very bullish about where we are going, and I remember last quarter, everybody was asking questions about whether or not we would have any politics at all. But it's going to come in and is coming in at a very rapid rate.

Speaker Change: But, you know, we're not not in a position to really quantify what exactly that is. It's going to be a very good year. Well, we feel really good. And I just like to point you to our footprint because one of the exciting things about Gray in particular.

Speaker Change: is that we have very significant exposure to essentially every single battleground state where this election will be decided on a presidential level.

Sandy Breland: In some of our large markets, we participate in third party audits with all other local television stations to track the shares our stations obtained from the television-only portion of local ad markets. These audits for the second quarter indicate that total ad dollars in some markets did decrease slightly over the past year. At the same time, however, the second quarter audits revealed that Gray's stations grew their shares of total advertising. As well as their shares of core revenue, fuels by strong digital sales and political ad revenue.

Speaker Change: and as well as significant exposure to both gubernatorial and senatorial races that are going to be very competitive.

Hilton Howell: And so, while we're not giving a guide, I will reiterate that we are very, very bullish about where we are coming. And I remember last quarter, everybody was asking questions about whether or not we would have any political at all this year.

Hilton Howell: but it's going to come in and is coming in at a very rapid pace.

Operator: All right. Before we take our next question, I just want to remind participants, you can press star one on your telephone keypad if you would like to join the question queue. Star one on your telephone keypad if you would like to join the question queue. And just so we can get to everybody in queue, just keep in mind we're taking one question at a time, but you can always rejoin the queue if you'd like. So next up, we have Steven Cahall of Wells Fargo.

Operator: All right, before we take our next question, I just want to remind participants that you can press star one on your telephone keypad if you would like to join the question queue. Press star one on your telephone keypad if you would like to join the question queue. And just so we can get to everybody in the queue, just keep in mind we're taking one question at a time, but you can always rejoin the queue if you'd like. So next up, we have Steven Cahall of Wells Fargo.

Operator: All right, before we take our next question, I just want to remind participants that they can press star one on their telephone keypad if they would like to join the question queue. Press star one on your telephone keypad if they would like to join the question queue, and just so we can get to everybody in the queue, just keep in mind we're taking one question at a time, but you can always rejoin the queue if you'd like. So next up, we have Steven Cahall of Wells Fargo.

Sandy Breland: We are not surprised by these results because we have seen, again, and again, that maintaining a strong focus on local newscast and community involvement retains viewers regardless of economic conditions. Our strong local stations proved themselves over the past year as they demonstrated the power of television to a large number of local professional sports teams and fans alike.

Operator: All right, before we take our next question, I just want to remind participants, you can press star one on your telephone keypad if you would like to join the question queue. Press star one on your telephone keypad if you would like to join the question queue.

Operator: And just so we can get to everybody in queue, just keep in mind we're taking one question at a time, but you can always rejoin the queue if you'd like. So next up we have Steven Cahill of Wells Fargo.

Steven Cahall: Thanks, Jeff, for the commentary on what drove the leverage a little higher this quarter. I know that's been a big focus has been getting that refinancing done, and you're repurchasing those 2027 notes. I was just wondering if you have a number in mind for leverage where you think you could be at the end of the year, between the free cash flow that you'll generate, maybe some benefit from, you know, assembly and obviously politics, that sort of thing.

Steven Cahall: Thanks, Jeff, for the commentary on what drove the leverage a little higher this quarter. I know that's been a the big focus has been getting that refinancing done and you're repurchasing those 2027 notes. I was just wondering if you have a number in mind for leverage where you think you can be at at the end of the year between the free cash low that you'll generate, maybe some benefit from, you know, assembly and obviously political, that sort of thing.

Steven Cahall: Thanks, Jeff, for the commentary on what drove the leverage a little higher this quarter. I know that's been the big focus has been getting that refinancing done, and you're repurchasing those 2027 notes. I was just wondering if you have a number in mind for leverage where you think you can be at the end of the year, between the free cash flow that you'll generate, maybe some benefit from, you know, assembly and obviously politics, that sort of thing.

Sandy Breland: In the last two weeks, as Taylor mentioned, we announced the launch of Rock Entertainment Sports in partnership with Dan Gilbert, Sports Entertainment, excuse me, Properties, as well as Palmetto Sports Entertainment, a new statewide sports network in South Carolina. Throughout this year, we have been working aggressively on a number of other opportunities to bring more sports back to local broadcast television stations. We are optimistic that we will have some exciting news in this area to announce soon.

Steven Cahill: Thanks, Jeff, for the commentary on what drove the leverage a little higher this quarter. I know that's been a the big focus has been getting that refinancing done and you're repurchasing those 2027 notes.

Speaker Change: I was just wondering if you have a number in mind for leverage where you think you can be at at the end of the year between the free cash flow that you'll generate, maybe some benefit from, you know, assembly and obviously political, that sort of thing.

Steven Cahall: And then to follow up on Dan's question, is there any way to think about the run rate of assembly EBITDA as you exit the year, Hilton, and you have so many more studios kind of signed up and chugging along there? I think we're all trying to understand what that can mean for earnings generation in the years to come. And then, maybe finally, Kevin, we'd just love to get a little more thinking on your subscriber outlook.

Steven Cahall: And then to follow up on Dan's question, is there any way to think about the run rate of Assembly EBITDA as you exit the year, Hilton, and you have...

Sandy Breland: So please, stay tuned.

Kevin Latek: I now turn the call over to Kevin. Hi, thank you, Sandy. As most of you know, over the course of a three-year cycle, Gray renews retransmission consent agreements covering roughly 400 traditional pay TV operators who carry our TV station signals to tens of millions of our mutual customers. Our current cycle began in the second half of 2022. We had anticipated some final renewals throughout the second half of this year.

Steven Cahall: So many more studios kind of signed up and chugging along there. I think we're all trying to understand what that can mean for earnings generation in the years to come. And then maybe finally, Kevin, we'd just love to get a little more thinking on your subscriber outlook. You said that you're optimistic that subscriber declines could start to improve here at some point.

Steven Cahall: You said that you're optimistic that subscriber declines could start to improve here at some point. As a long-term media analyst, this isn't necessarily something I've observed much of in my career, but would just love to kind of compare notes on it and see when you think that might just start to happen. Thank you. Yeah, Steven, it's Jeff.

Steven Cahall: As a long media analyst, it isn't necessarily something I've observed much of in my career, but would just love to kind of compare notes on it and see.

Jeff Gignac: Yeah, Steven, it's Jeff. So I guess what I would say on the on the production companies line, we didn't change our guide that's still at the same 105 number. And it reflect our reflected our expectations around leasing at the studios along with the other production companies. So I think that that'll directionally get you to what we expect for the full year from from that piece of it. As it relates to leverage, I'm sure when people saw the 5.9, they said that there was maybe a little bit of head scratching and it was, we do it as a timing thing by the time we get to the end of third quarter, with the cash that we expect to generate.

Jeff Gignac: Yeah, Steven, it's Jeff. So I guess what I would say on the production companies' line: we didn't change our guide, that's still at the same 105 number. And it reflects our expectations around leasing at the studios along with the other production companies. So I think that, you know, that'll give you a directionally get you to what we expect for the full year from that piece of it. As it relates to leverage, I'm sure when people saw the 5.9, they said that there was maybe a little bit of head scratching and it was, we do it as a timing thing by the time we get to the end of the third quarter.

Jeff Gignac: Yeah, Steven, it's Jeff. So I guess what I would say on the production companies' line: we didn't change our guide. That's still at the same 105 number, and it reflects our expectations around leasing at the studios along with the other production companies. So I think that, you know, that'll get you to what we expect for the full year from that piece of it. As it relates to leverage, I'm sure when people saw the 5.9, they said that there was maybe a little bit of head scratching and it was, we do it as a timing thing by the time we get to the end of the third quarter with the cash that we expect to generate.

Kevin Latek: We can now report that within the past few days, Gray has reached agreements and agreements in principle completing the current 2022-2024 renewal cycle. Our next set of material MVPD retransm renewals occurs in the first quarter of 2026 with operators who serve approximately 23% of our traditional MVPD subbase. In the second quarter of 2026, our renewals will cover about 18% of our traditional MVPD subscribers. The next group covering about 34% of these subs will come up in the first quarter of 2027 with remaining 25% of traditional MVPD subs covered in the final tranche of renewals occurring in the third quarter of 2027.

Jeff Gignac: When do you think that might just start to happen? Thank you. Yeah. Steven, it's Jeff. So I guess what I would say on the production company's line, we didn't change our guide. That's still at the same 105 number, and it reflected our expectations around leasing at the studios along with the other production companies. So yeah.

Jeff Gignac: I think that'll directionally get you to what we expect for the full year from that piece of it.

Jeff Gignac: As it relates to leverage, I'm sure when people saw the 5.9, they said there was maybe a little bit of head scratching. And it was, we do it as a timing thing by the time we get to the end of third quarter.

Jeff Gignac: With the cash that we expect to generate, you know, as I said in my prepared remarks, we should be out of the revolver, depending on, you know, exactly where the final political number shakes out. And the priority for the political cash flow is to get the debt repaid. So, again, depending on exactly where politics shakes out, we should be, you know, probably something in the low to mid fives at the end of the year, just depending on exactly where things shake out.

Jeff Gignac: You know, as I said in my prepared remarks, we should be out of the revolver, depending on, you know, exactly where the final political number shakes out. And the priority for the political cash flow is to get the debt repaid. So, again, depending on exactly where political shakes out, we should be, you know, we should be probably something in the, low to mid fives at the end of at the end of the year, just depending on exactly where things shake out.

Jeff Gignac: You know, as I said in my prepared remarks, we should be out of the revolver, depending on, you know, exactly where the final political number shakes out. And the priority for the political cash flow is to get the debt repaid. So, again, depending on exactly where politics shakes out, we should be, you know, probably something in the low to mid fives at the end of the year, just depending on exactly where things shake out.

Jeff Gignac: with the cash that we expect to generate. You know, as I said, in my prepared remarks, we should be out of the revolver, depending on you know, exactly where the final political number shakes out.

Kevin Latek: Once again, Gray has completed a retransm renewal cycle without a single public dispute impacting our business, the distributor's business, or our mutual customers. We evaluate the collaborative approach with our retrans partners to secure a continued distribution of our strong data stations without interruption. Importantly, Gray obtained a necessary rate increases in terms that reflect the formal value that the content our stations deliver to these distributors. We remain optimistic that the pace of sub declines will slow going forward.

Jeff Gignac: And the priority for the political cash flow is to get the debt repaid. So again, depending on exactly where political shakes out, we should be, you know, we should be probably something in the...

Speaker Change: low to mid fives at the end of the year, just depending on exactly where things shake out.

Mike Corain: All right, next up we have Mike Corain of Truist Securities.

Mike Corain: All right, next up, we have Mike Corain of Truist Securities.

Operator: All right, next up, we have Mike Corain of Truist Securities.

Mike Corain: Hey, thanks for taking my question. I wanted to maybe try to ask the political question one slightly different way.

Mike Corain: Hey, thanks for taking my question. I wanted to maybe try to ask the political question in a slightly different way.

Speaker Change: All right, next up we have Mike Corain of Truist Securities.

Kevin Latek: This is a result of the addition of more streaming apps to MVPD bundle. The proliferation of ads and price increases in streaming products, more MVPD control over the carriage and payment for the Little Watch cable channel, and the migration of force to broadcast networks and local stations. To date, however, traditional MVPD subscriber base has continued to decline this year at about the same pace as last year. This is in contrast to our more optimistic expectations earlier this year.

Mike Corain: Hey, thanks for taking my question. I wanted to maybe try to ask the political question one slightly different way. You lowered your core guidance for the full year.

Unknown Executive: You lowered your core guidance for the four year by about 75 million. And it looks like, you know, maybe part of that was due to, you know, the Q2 results were, you know, core was maybe eight or nine lower than what you were expecting in Q2. But how much of that, you know, the remaining 66 to 67 million decline in your core guidance is from displacement or crowding out?

unknown: You lowered your core guidance for the four year by about 75 million. And it looks like, you know, maybe part of that was due to, you know, the Q2 results were, you know, core was maybe eight or nine lower than what you were expecting in Q2. But how much of that, you know, the remaining 66 to 67 million decline in your core guidance is from displacement or crowding out?

Jeff Gignac: You lowered your core guidance for the full year, by about $75 million. And it looks like, you know, maybe part of that was due to, you know, the Q2 results were, you know, looks like core was maybe eight or nine lower. And what you were expecting in Q2. But how much of that, you know, the remaining like 66 to 67 million decline in your core guidance is from displacement or crowding out and how much is due to that weakness that you saw kind of at the end of the Q2 and, you know, expecting Are you expecting core to continue to be a little bit weaker or is that really just displacement from From political, Yeah, I guess.

unknown: by about 75 million. And it looks like, you know, maybe part of that was due to, you know, the Q2 results were, you know, looks like core was maybe eight or nine lower.

Unknown Executive: And how much is due to that weakness that you saw kind of at the end of Q2? And, you know, expecting core to continue to be a little bit weaker? Or is that really just displacement from politics? Yeah, I guess.

unknown: and what you were expecting in Q2, but how much of that, you know, the remaining like 66 to 67 million?

unknown: And how much is due to that weakness that you saw kind of at the end of Q2? And, you know, expecting core to continue to be a little bit weaker? Or is that really just displacement from politics? Yeah, I guess.

Kevin Latek: Given these experiences through the first half of 2024, we are bringing our guidance for full-year retransmission down by about 3 percent to approximately $1.475 billion. We continue to anticipate network affiliation fees of approximately $935 million per year, essentially in line with last year's amount. As a reminder, we will be negotiating new affiliation agreements with each of the big four networks over the next 18 months. The networks see the same trends we do, and we know that they also see the same value to their businesses that only strong local affiliates can provide.

unknown: decline in your core guidance is from displacement or crowding out and how much is due to that weakness that you saw kind of at the end of the Q2 and, you know, expecting

Jeff Gignac: Yeah, I guess I'll start and Pat and Sandy can provide some color. I mean, if you look at our guide and where it is and where it's shaking out, you know, the revised billion 525. That's still, that's still up versus 23. Despite the fact that we are going to be cramming a whole heck of a lot of politics into the next 90 days. So I don't know that there's, I don't know that there's a specific read through when we look at the business itself. We've got a new local direct that's performing well.

Unknown Executive: Yeah, I guess I'll start, and Pat and Sandy can provide some color. I mean, if you look at our guide and where it's shaking out, you know, the revised billion 525. That's still, it's still up versus 23. Despite the fact that we are going to be cramming a whole heck of a lot of politics into the next 90 So I don't know that there's, I don't know that there's a specific read through when we look at the business itself. We've got new local direct that's performing well, that's a barometer for the broader economic outlook that's out there.

Jeff Gignac: Yeah, I guess I'll start and Pat and Sandy can provide some color. I mean, if you look at our guide and where it and where it's shaking out, you know, the revised billion 525. That's still that's still up versus 23. Despite the fact that we are going to be cramming a whole heck of a lot of political into the next 90 So I don't know that there's I don't know that there's a specific read through when we look at the business itself. We've got we've got new local direct that's performing well.

Speaker Change: Are you expecting CORE to continue to be a little bit weaker, or is that really just displacement from political?

Jeff Gignac: Yeah, I guess I'll start and Pat and Sandy can provide some color. I mean, if you look at our guide and where it's shaking out, you know, the revised billion 525, that's still up versus 23.

Jeff Gignac: Despite the fact that we are going to be cramming a whole heck of a lot of political into the next 90 days.

Kevin Latek: We will not get into details or specifics of our network affiliation agreements, which remain strictly confidential. What we can tell you is that Gray has been and will remain committed to adjusting the network's side of the retransmission equation to ensure that they reflect the significant changes to the television ecosystem that have occurred over the past few years.

Jeff Gignac: So I don't know that there's, I don't know that there's a specific read-through when we look at the business itself. We've got

Jeff Gignac: That's a barometer for the broader economic outlook that's out there, from a data point of view. Let me just cite a specific data point. So if you compare our performance in the last presidential cycle, if you compare Q4 of 2020. Q4 of 2019. We had about 10% displacement during the 2020 political cycle. So, it's at least a data point that you can think about, but it's very difficult to put a specific number on exactly how much impact we're going to see.

Jeff Gignac: That's a barometer for the broader economic outlook that's out there. It's from a data point of view. Let me just cite a specific data point. So if you compare our in the last presidential cycle, if you compare Q4 of 2020. Q4 of 2019. We had about 10% displacement, in the 2020 political cycle. So, It's at least a data point that you can think about, but it's very difficult to put a specific number on exactly how much impact we're going to see there.

Unknown Executive: From a data point of view, let me just cite a specific data point. So, if you compare our last presidential cycle, if you compare Q4 of 2020, Q4 of 2019, we had about 10% displacement in the 2020 political cycle. So, it's at least a data point that you can think about, but it's very difficult to put a specific number on exactly how much impact we're going to see.

Jeff Gignac: I think that covers it. Yeah.

Jeff Gignac: We've got new local direct that's performing well, that's a barometer for the broader economic outlook that's out there.

Jeff Gignac: From a data point of view, let me just cite a specific data point. So if you compare in the last presidential cycle, if you compare Q4 of 2020 to Q4 of

Jeff Gignac: With this concludes my remarks, and I turn the call now to Jeff. Thanks, Kevin. Hilton and Pat covered the key financial highlights of the quarter, which are detailed in the earnings release in the 10Q. I'll therefore focus most of my remarks on the big improvements we made recently to our balance sheet. But first, I'd like to point out that, as Hilton mentioned, our adjusted EBITDA for Q2 came in at $225 million.

Jeff Gignac: We had about 10% displacement.

Jeff Gignac: in the 2020 political cycle. So it's at least a data point that you can think about, but it's very difficult to put a specific number on exactly how much impact we're gonna see there.

Unknown Executive: I think that covers it. Yeah.

unknown: I think that covers it. Yeah.

Jeff Gignac: This exceeded our expectations as our operating expenses were $17 million below the low end of our guidance range of $624 million. During the quarter we capitalized on receptive debt market conditions to extend $1.85 billion of our 2026 maturities. We also increased our revolving credit facility commitments to $680 million, all of which is due on December 31, 2027. This financing provides us with clear line of sight to addressing our 2027 notes maturity, using on balance sheet liquidity and the significant cash flow we expect to generate later this year, and again in 2026.

David Hamburger: All right, the next question is from David Hamburger of Morgan Stanley.

David Hamburger: I think that covers it. Yeah.

Speaker Change: Next question.

unknown: Your distribution revenue, the trends over the last few years continue to deteriorate, and I know you called out subscriber churn as being a primary driver of that. Now that you've locked in all of your distribution renewals for the next couple of years, I'm curious, it seems as though the affiliate expense growth has flattened, so you have a pretty significant structural imbalance here, and I'm wondering, as you go into the next 18 months of the renewal process with the networks, what can you do, and how can you position yourself to, you know, get some of the relief necessary to get that back in balance?

David Hamburger: I thank you for the question. So your distribution revenue, the trends over the last few years continue to deteriorate. And I know you called out subscriber churn as being a primary driver of that. Now that you've locked in all of your distribution renewals for the next couple of years, I'm curious, you know, it seems as though the affiliate expense growth has flattened. So you have a pretty significant structural imbalance here.

Kevin Latek: I thank you for the question. So your distribution revenue, the trends over the last few years continue to deteriorate. And I know you called out, you know, subscriber churn as being a primary driver of that. Now that you've locked in all of your distribution renewals for the next couple of years, I'm curious, you know, it seems as though the affiliate expense growth has flattened. So you have a pretty significant structural imbalance here.

Speaker Change: All right, the next question is from David Hamburger of Morgan Stanley .

Speaker Change: Thank you for the question. So, your distribution revenue...

Speaker Change: Transcripts provided by Transcription Outsourcing, LLC.

Speaker Change: all of your distribution renewals.

unknown: for the next couple of years. I'm curious, you know, it seems as though the affiliate expense growth has flattened. So you have a pretty significant structural imbalance here. And I'm wondering, as you go into the next 18 months,

Jeff Gignac: We sincerely appreciate the banks in our lending group that have stood by us for many years, as well as those who joined our lending group in the last few months. We also sincerely appreciate the support of the many investors who understood our business and our plans and followed through with very strong commitments to purchase our new senior secured loan and our new senior secured notes. As Hilton mentioned earlier, reducing debt and leverage remains our top capital allocation priority.

David Hamburger: And I'm wondering, as you go into the next 18 months, the renewal process with the networks, you know, what can you do? And how can you position yourself to, you know, get some of the relief necessary to get that back in balance? I mean, is it me trying to get more of the networks onto a very variable pricing model? Or, you know, how do you see reversing this trend that seems to kind of be a bit pernicious in your numbers?

Kevin Latek: And I'm wondering, as you go into the next 18 months, renewal process with the networks, you know, what can you do and how can you position yourself to, you know, get some of the relief necessary to get that back in balance? I mean, is it me trying to get more of the networks onto a very variable pricing model? Or, you know, how do you see reversing this trend that seems to kind of be a bit pernicious in your in your numbers?

Speaker Change: Renewal process with the networks, you know, what can you do and how can you position yourself to you know? Get some of the relief Necessary to get that back in balance I mean, is it me trying to get more of the networks onto a very variable pricing model or you know, how

unknown: I mean, is it me trying to get more of the networks onto a very variable pricing model? Or, you know, how do you see reversing this trend that seems to kind of be a bit pernicious in your numbers persistently?

Jeff Gignac: And to that end, following the completion of the refinancing in Q2, we retired 50 million of our 2027 notes via open market repurchases at an average price of approximately 90.5% a park. Subsequent to quarter-end, in July, we acquired an additional 29 million of face value of the 2027 notes at just over 92% a park. As of August 7th, we have $178 million remaining under the previously announced $250 million open-market purchase program, and we'll continue to monitor market conditions for additional open-market repurchase opportunities.

unknown: Do you see reversing this trend that seems to kind of be a bit pernicious in your in your numbers persistent?

Kevin Latek: Sure. Hi, this is Kevin Latek.

Kevin Latek: We have probably seen a peak decline in our re-trends this quarter. Going forward, we should see the declines should be less and less. The Networks Fee has slowed and has been largely stable over the last couple of years as growth has now started to come down. What we've said a couple of times, to reiterate it again, is that we and everyone else have had a lot of discussions with the networks about what's happened to growth. The technical side of the equation and the subscriber numbers to underpin the assumptions that went into the network affiliation pricing. Certainly, for us, we had models, and I'm sure they had models, too.

Kevin Latek: We have probably seen a peak decline in our re-trends this quarter. Going forward, we should see the declines should be less and less, the Namuwiki. The subscriber numbers underpin the assumptions that went into the network affiliation pricing. For us, we had models, and I'm sure they had models, and the subscriber numbers have not been as good as we had expected. And as a result, our expectations were not met in the current contracts.

Kevin Latek: We have seen probably a peak decline in our retrends this quarter. Going forward, we should see the declines should be less and less, there are a couple of reasons for that but we can't get into our details of the contracts. You're right the network fee growth slowed and then has been largely stable in the last couple of years as the gross has starting to come down. What we said a few times just kind of reiterating it again we and everyone else have had a lot of discussion with the networks about what's happened to the gross, side of equation and the subscriber numbers that underpin the assumptions that went into the network affiliation pricing. Certainly for us, we had models, and I'm sure they had models.

Kevin Latek: Sure. Hi, this is Kevin Latek. We have seen probably a peak decline in our retrends this quarter. Going forward, we should see the declines should be less and less.

Kevin Latek: There's a couple reasons for that, but we're not going to get into the details of our contracts.

Jeff Gignac: Further, our strong cash flow generation in July allowed us to repay $75 million of our revolver on August 1st, leaving $125 million currently drawn. As of August 7th, that leads us with available liquidity of over $600 million from cash on hand and undrawn revolver capacity. Depending on the timing of additional open-market repurchase activities, we currently expect to fully repay our revolver by quarter-ent. One last item I'd like to point out is that our leverage metrics did kick up slightly from Q1 to Q2.

Speaker Change: You're right, the network speed growth slowed and then has been largely stable the last couple years as the growth is now starting to come down.

Kevin Latek: What we've said a couple times, kind of to reiterate it again, is we, we and everyone else have had a lot of discussions with the networks about what's happened to the growth.

Kevin Latek: And the subscriber numbers have been not as good as we had expected. And as a result of our expectations were not met in the current contracts, the next run of contracts, we will need to price it, what we're paying in outworks, more fairly, more appropriately remind you that we compensate networks through cash and through eyeballs and networks derived between half and two-thirds of their revenue from selling advertising that appears in the affiliate markets, not their owned and operated stations, those ads that we are airing and our peers are airing on their stations, are a significant amount of compensation for the network. The affiliates who have stronger local ratings are delivering more eyeballs to those network programs, allowing the networks to monetize those network programs better than other opportunities.

Kevin Latek: side of the equation and the subscriber numbers that underpin the assumptions that went into the network affiliation pricing.

Kevin Latek: And the subscriber numbers have not been as good as we had expected. And as a result, our expectations were not met in the current contract. The next running contract we will need to price it and buy a lot of it; we'll have to miss out on most of our buyers. And so I don't think anybody who learned what we're paying the networks more fairly, more appropriately. I'll remind you that we compensate networks through cash and through eyeballs, and networks derive between half and two-thirds of their revenue from selling advertising that appears in the affiliate markets, not on their owned and operated stations. Those ads that we are airing and our peers are airing on their stations are a significant amount of compensation for the network. The affiliates who have stronger local ratings are delivering more eyeballs to those network programs, allowing the networks to monetize those network programs better than other opportunities.

Kevin Latek: Certainly for us, we had models and I'm sure they had models. And the subscriber numbers have been not as good as we had expected. And as a result, our expectations were not met in the current contract. The next run of contracts, we will need to price.

Jeff Gignac: This was expected and is mostly related to the timing of our refinancing as we paid fees and expenses related to the refinancing and had to settle interest on the 2026 notes tender offer prior to quarter-ent. The other notable factors on the leverage ratio denominator. On that side, we have a timing swing related to political revenue. In Q2 of 22, the quarter that's rolling out of our 8-quarter calculation, political was $90 million.

Kevin Latek: The next run of contracts, we will need to price it, what we're paying the networks, more fairly, more appropriately remind you that we compensate networks through cash and through eyeballs, and networks derive between half and two-thirds of their revenue from selling advertising that appears in the affiliate markets, not their owned and operated stations. Those ads that we are airing and our peers are airing on their stations are a significant amount of compensation for the network. The affiliates who have stronger local ratings are delivering more eyeballs to those network programs, allowing the networks to monetize those network programs better than other opportunities.

Kevin Latek: What we're paying the networks, more fairly, more appropriately, I'll remind you that we compensate networks through cash and through eyeballs, and networks derive...

Kevin Latek: between half and two thirds of their revenue from selling advertising that appears in the affiliates markets not their owned in oper stations

Jeff Gignac: In Q2 of 24, political was $47 million. Our guidance for year-to-date political through Q3, 24 indicates that we expect Q3 to approximate our year-to-date 22 and 2020 political, which will normalize the denominator in our calculation and align with third-quarter cash flows.

Kevin Latek: Those ads that we are airing and our peers are airing on their stations are a significant amount of compensation for the networks.

Kevin Latek: The affiliates who have stronger local ratings are delivering more eyeballs to those network programs, allowing the networks to monetize those network programs better than other opportunities.

Kevin Latek: That is part of the compensation that we are providing them. So our conversation with the networks will continue to be that we are compensating you for these eyeballs, which are above the affiliate average, and we're compensating you in money. And we need to set the amount we are compensating you at an appropriate level that rewards us for delivering what we're delivering in both eyeballs and dollars. And the end result, and our very strong belief, is that our network of relationships is too high for the current environment and will need to be adjusted down in the next round.

Kevin Latek: That is part of the compensation that we are providing them. So our conversation with the networks will continue to be that we are compensating you with these eyeballs, which are above the affiliate average, and we're compensating you in money. And we need to set the amount we are compensating you at an appropriate level that rewards us for delivering what we're delivering in both eyeballs and dollars. And that end result, and our very strong belief is that our network of relations fees are too high for the current environment, and will need to be adjusted down in the next round.

Jeff Gignac: This concludes my remarks and I'll turn the call back over to you. Thank you very much.

Operator: Operator at this time would like to open up the call for any questions anyone may have. All right. Once again, let me say gentlemen, please press our one on your telephone keypad if you'd like to join the question to you. Let us start our one on your telephone keypad if you would like to join the Q. And saying we have several in Q so far, look for your first question.

Kevin Latek: And we're compensating you in money, and we need to set the amount we are compensating you at an appropriate level that rewards us for delivering what we're delivering in both eyeballs and dollars.

Daniel Kurnos: We'll come up from Daniel Kernos of Benchmark V. Great. Thanks.

Kevin Latek: And that end result, in our very strong belief, is that our network of relationships are too high for the current environment.

Kevin Latek: And exactly how that happens is not something we can speculate on because, again, those conversations will happen in 18 months, over the next 18 months. A lot of people are going to negotiate with company networks before then, and a lot of things are going to happen in this industry, no doubt over the next several months and years. So we're not going to speculate on the exact outcome, except the headline is that we need those costs to come down in order to remain affiliated with the networks. And we expect that there is a number there that works for both parties. All right, next up we have Richard Durnley of Long.

Kevin Latek: And exactly how that happens is not something we can speculate on because, again, those conversations will happen 18 months from now, you know, over the next 18 months. A lot of people are going to negotiate with company networks before then, and a lot of things are going to happen in this industry, no doubt over the next several months and years. So we're not going to speculate on the exact outcome, except the headline is that we need those costs to come down in order to remain affiliated with the networks. And we expect that there is a number there that works for both parties. All right, next up we have Richard Durnley of Long.

Kevin Latek: And exactly how that happens is not something we can speculate, because again, those conversations happen 18 months, you know, over the next 18 months, a lot of people are going to negotiate with company networks before then, and a lot of things are going to happen in this industry, no doubt over the next several months and years. So we're not going to speculate on the exact outcome, except the headline is that we need those costs to come down in order to remain affiliated to the networks. And we expect that the there is a number there that works for both parties. All right, next up we have Richard Durnley of Long

Pat LaPlatney: Good morning. Three if I could. Just first on political, third-party sources have already taken up estimates for the year, pretty substantial even before the transition and the Democratic Party of whose running. And the peers, your peers, at least at least records. I know that visibility is super limited in July was slow obviously until Biden dropped out of the race. But just what can you guys give us any update? I assume you guys think you're going to take political market share here.

Kevin Latek: And we'll need to be adjusted down in the next round. And exactly how that happens is not something we can speculate. Because again, those conversations happen 18 months, you know, over the next 18 months.

Kevin Latek: A lot of people are going to negotiate with company networks before then, and a lot of things are going to happen in this industry, no doubt, over the next several months and years. So we're not going to speculate on the exact outcome, except the headline.

Kevin Latek: is that we need those costs to come down in order to remain affiliate to the networks and we expect that there is a number there that works for both parties.

Pat LaPlatney: I just want to gauge your level of confidence relative to 2020 here on how this might play out. I think we're all pretty optimistic on political, but I think we've also been crystal clear that we're not going to give a guide for the full year. So we've provided a pretty strong guide for Q3 that puts Q3 at the same spot as 2020. And also for what is worth, same spot as 2022, despite the fact we didn't have $30 million of presidential primary money.

Richard Durnley: Good morning.

Operator: Good morning.

Operator: All right, next up we have Richard Durnley of Longport.

Richard Durnley: Good morning. Could you, the refi for five years, was there any thought about terming a longer term for some of those that, that debt?

Jeff Gignac: Yeah, it's Jeff. So yeah, we evaluated the market, we looked at a whole range of different opportunities, different opportunities and availability of capital. And ultimately, it came down to putting something in place that was the right balance of cost and tenor. And that really, you know, accomplished our objective of getting rid of our 2026 maturities in the most efficient way with the best term.

Pat LaPlatney: But we're going to leave it to everyone else to make their predictions on what Q4 is going to be like and what the full year will be. But we're very optimistic. We're seeing lots of good signs, but we are not going to put a number out. Dan and I hope you understand that, but I will tell you, everybody here is extremely bullish on political for this entire year. You know, we've only got 90 something days to the election and in some states, they start voting about 30 days. And so we're seeing a tremendous amount of political advertising that is coming in and we expect it to be a really good year.

Jeff Gignac: putting something in place that was the right balance of cost and tenor, and that really, you know, accomplished our objective of getting rid of our 2026 maturities in the most efficient way with the best terms.

Operator: Next up, we have Craig Huber at Huber Research.

Craig Huber: Next up, we have Craig Huber at Huber Research.

Craig Huber: Next up, we have Craig Huber from Huber Research.

Craig Huber: Yeah, hi there. On Assembly Atlanta, can you just update us on what the final cost for the project will be, net and gross, at the end of this year? And then also, it sounds like, based on your commentary and your guidance for the rest of the year for Assembly, the 105 number, that maybe we should assume the first quarter next year is when we sort of see a meaningful return on that, that benefits your P&L? Is that fair?

Craig Huber: Yeah, hi there. At Assembly Atlanta, can you just update us on what the final cost for the project will be net and gross at the end of this year? And also, based on your commentary and your guidance for the rest of the year for Assembly, the 105 number, maybe we should assume the first quarter next year is when we sort of see a meaningful return on that that benefits your P&L. Is that fair?

Speaker Change: dri rappe

Craig Huber: Next up we have Craig Huber at Huber Research.

Craig Huber: Hi there. On Assembly Atlanta, can you just update us on what the final cost for the project will be net and gross at the end of this year? And then also, it sounds like, based on your commentary and your guidance for the rest of the year for Assembly, the 105 number.

Kevin Latek: Okay, fair enough. How's keeping Kevin? When are the network, not won't ask for terms, just when are the network renewals up? We have all the network renewals up in the next 18 months. There's a schedule in our investor deck from March that lists them out by network. Okay.

Hilton Howell: I think that's fair in first quarter, yeah.

unknown: I think that's fair in the first quarter, yeah.

Unknown Executive: I think that's fair in the first quarter, yeah.

unknown: That maybe we should assume the first quarter next year is when we start to see a meaningful return on that that Benefits your P&L. Is that fair?

unknown: Yeah. Yeah. And Craig, on the other part of your question, the final cost, that was 571. 571 million. Okay.

Unknown Executive: Yeah, yeah. And Craig, on the other part of your question, the final cost, that was 571. 571 million.

Jeff Gignac: Yeah, yeah. And Craig, on the other part of your question, the final cost, that was 571. 571 million.

unknown: I think that's fair in first quarter, yeah.

unknown: Yeah, and Craig, on the other part of your question, the final cost, that was $571.

Craig Huber: Okay, thank you very much.

Operator: Okay, thank you very much.

Craig Huber: Okay, thank you very much.

Hilton Howell: And then Hilton, just on assembly, any way to kind of gauge your optimism on how the cash flow evolves from here and how you're thinking about, you know, kind of the payback now that you guys have most of the costs. Well, as you know, we have the studios are built, right? And they are, they were profitable from day one with the conclusion as I, as I mentioned in our prepared remarks, you know, getting eye out seeing the, and the teams to use and the full votes behind everyone has really put a lot of wind in the sales.

Mike Corain: All right, and our final question for the day will be from Mike Corain of Truist Security.

Operator: All right, and our final question for the day will be from Mike Corain of Truist Security.

Mike Corain: All right, and our final question for the day will be from Mike Corain of Truist Security.

Mike Corain: 571 million

Mike Corain: Okay, thank you very much.

Mike Corain: Thanks, just one more question on the bond repurchase authorization. Are you guys planning to continue to only target the sevens of 27? Or would you look at other bonds in the capital structure? Yeah.

unknown: Thanks, just one more question on the bond repurchase authorization. Are you guys planning to continue to only target the sevens of 27? Or would you look at other bonds in the capital structure? Yeah.

unknown: All right, and our final question for the day will be from Mike Corain of Truist Security.

unknown: Hey, thanks. Just, you know, one more question on the bond repurchase authorization. Are you guys planning to continue to only target the sevens of 27 or would you look at other bonds in the capital structure?

Unknown Executive: Yeah, I think look, I think we'll be guided by where the best return will be balancing the fact that we have a 27 maturity with where the pricing is at any point in time. So, and in the meantime, we don't have to execute on any of that; we do have 125 million more on the revolver. So it's totally opportunistic. We'll be guided by what the markets tell us.

Jeff Gignac: Yeah, I think look, I think we'll be guided by where the best return will be balancing the fact that we have a 27 maturity with where the pricing is at any point in time. So, and in the meantime, we don't have to execute on any of that; we do have 125 million more on the revolver. So it's totally opportunistic. We'll be guided by what the markets tell us.

Jeff Gignac: Yeah, I think look, I think we'll be guided by where the best return will be balancing the fact that we have a 27 maturity with where the where the pricing is at any point in time. So and in the meantime, we don't have to execute on any of that we do have 125 million more on the revolver. So It's totally opportunistic. We'll be guided by what the markets tell us.

Jeff Gignac: Yeah, I think, look, I think we'll be guided by where the best return will be balancing the fact that we have a 27 maturity with...

Hilton Howell: And in fact, I mean this afternoon after this call with individuals that are coming in to look at studios that are, you know, really prominent folks in this business. It's unbelievable how quickly things turned. We have secured and, you know, Gray, we like to make sure we have our eyes dotted and teased cross before we talk about things, but we have secured a very solid lease with a very important client that we're very, very proud of that is actually offering right now. And so we expect all of our studios to be leased up in the early near future.

Jeff Gignac: where the pricing is at any point in time. So, and in the meantime, we don't have to execute on any of that. We do have 125 million more on the revolver. So, it's totally opportunistic. We can, we'll be guided by what the markets tell us.

Unknown Executive: All right.

Hilton Howell: All right, if that was the last question, operator, I just want to thank everyone for their time this morning. We're very excited about the next time we get a chance to talk to you because I've got some we'll be able to give you real numbers on this political race, which is evolving in a very positive way throughout the entire broadcast. Thank you for being with us this morning, and we'll talk to you in the bedroom.

Hilton Howell: All right, if that was the last question, operator, I just want to thank everyone for your time this morning. We're very excited about the next time we get a chance to talk to you because I've got a we'll be able to give you real numbers on this political race, which is evolving in a very positive way for the entire broadcast. Thank you for being with us this morning and we'll talk to you in the river.

Hilton Howell: All right, if that was the last question. Operator, I just want to thank everyone for your time this morning. We're very excited about the next time we get a chance to talk to you because I've got a we'll be able to give you real numbers on this political race, which is evolving in a very positive way for the entire broadcast industry.

Janie Scott: Next up, we have Janie's got a Harrington research. Okay. Thanks.

Operator: With that ladies and gentlemen, this does conclude the call. You may now disconnect your lines and thank you again.

Operator: With that, ladies and gentlemen, this does conclude the call. You may now disconnect your lines, and thank you again for joining us today.

Janie Scott: One question I have is about local sports. You know, you've, you've always been involved a lot into into it, especially with Raycombe. And you, you and your peers have been leaning even more into that in recent years. And I wonder if that you might talking more about the approach you might take to identify additional ways you can be involved since that's obviously a clearly attractive way to keep people in the broadcast area. Yeah.

Operator: With that, ladies and gentlemen, this does conclude the call. You may now disconnect your lines and thank you again for joining us today.

Sandy Breland: I think that, you know, we've been really clear that we're interested in doing more local sports partnerships. We had a just concluded our first year with the Phoenix Sun. Extremely successful. We are happy with how it's going. So is the team. We're working currently with four NBA teams, the Atlanta Dream, the Las Vegas Aces, the Phoenix Mercury, and through a partnership with Tagna, the Indiana fever and several markets. And we're happy with how that's going as well.

Sandy Breland: I mean, it's a great local sports in local news or a great combination. And, you know, the teams that we're working with are seeing that increased distribution and reach. And so we are absolutely interested and have shared with you guys on multiple calls that we are working on additional partnerships.

Sandy Breland: And as I said, we hope to have some really exciting news soon.

Unknown Executive: Okay, great. Moving right along.

Craig Huber: Our next question will come from Craig Huber. Your minute now. Great. Thank you.

Pat LaPlatney: My first question. Can you just elaborate a little bit further on your core ad revenue comment about it tailing off in the month of June. Do you feel that there was more economic driven or just one or two categories? And whatever you saw in June, what parts that on the negative side have carried forward into third quarter? I mean, comment there, please. Yeah, it's bad. I would say, you know, it was primarily drawn by auto.

Pat LaPlatney: Jalen off at the end of the second and third quarter, our auto is down mid single digits. You know, although we've seen an uptake here in the last couple of weeks, possibly due to the Olympics. So look, in terms of broader economic outlook, I think we're projecting to be flat to plus three things are pretty positive out there. If you look at the long list of categories that we track, we have many more up then down in third quarter.

Pat LaPlatney: And while auto is down and it's a big one, there are other large ones that are up as well. So we are, you know, we are pretty bullish as far as mainstream goes third quarter. Yeah, I think just to add to that, Pat, too, we see, you know, we see that over and over again with our strong performance on new local direct. And the emphasis we've had there with our really strong sales teams is we saw an increase in second quarter. Again, record setting of double digits. And we just finished July with a 20% increase in new local direct. All right.

Unknown Executive: Next up, we have all the signer of JP Morgan.

Pat LaPlatney: Thank you and good morning. I recognize you're not going to give a political guide. And so I'm going to try and ask it a little bit differently if I could. You took revenue down for the full year by 100 million. How much better do you think political has become for gray since Biden stepped down? And if you don't answer it that way, I think BIA took up their estimates for political spend this year by about 5%. Again, is that the right way to think about it as they think of offsets for the revenue decline?

Unknown Executive: Thank you. It's really hard to make that call. I mean, clearly, you know, Biden stepping back had a significant positive impact not just on the presidential, but right down the ballot. So I look, there's going to be more money out there. But, you know, we're not in a position to really quantify what exactly that is. It's going to be a very good year. Well, we feel really good. And I think this is all that I just like to point you to our footprint because one of the exciting things about gray in particular is that we have very significant exposure to essentially every single battleground state for this election will be decided on a presidential level.

Unknown Executive: And as well as significant exposure to both women of twirl and senatorial races that are going to be very competitive. And so while we're not giving a guide, I will reiterate that we are very, very bullish about where we are coming. And I remember last quarter, everybody's asking questions about whether or not we would have any political at all. But it's going to come in and it is coming in at a very rapid pace Well I'm before we take our next question I just want to remind participant you can press star one on your telephone keypad if you would like to join the question queue.

Steven Cahall: So the next step we have being a tale of Wells Fargo. Thanks Jeff, for the commentary on what drove the leverage a little higher this quarter, I know that's been a the big focus has been getting that refinancing done and you're repurchasing those 2027 notes. I was just wondering if you have a number in mind for leverage where you think you can be at at the end of the year between the free cash flow that you'll generate.

Steven Cahall: Maybe some benefit from, you know, assembly and obviously political that sort of thing. And then to follow up on Dan's question, is there any way to think about the run rate of assembly EBITDA as you exit the year Hilton and you have so many more studios kind of signed up and and chugging along there I think we're all trying to understand what what that can mean for earnings generation in the in the years to come.

Steven Cahall: And then maybe finally Kevin would just love to get a little more thinking on your subscriber outlook. You know, you said that you're optimistic that subscriber declines could start to improve here at some point. As a long media analyst, it isn't necessarily something I've observed much of in my career, but would just love to kind of compare notes on it and see when you think that might just start to happen. Thank you.

Steven Cahall: Yeah, Steven, it's Jeff. So I guess what I would say on the production company's line, we didn't change our guide that's still at the same 105 number. And it reflected our expectations around leasing at the studios along with the other production companies. So I think that, you know, that'll directionally get you to what we expect for the full year from from that piece of it. As it relates to leverage, I'm sure when people saw the 5.9, they said there was maybe a little bit ahead scratching and it was to review it as a timing thing by the time we get to the end of third quarter.

Steven Cahall: With the cash that we expect to generate, you know, as I said in my prepared remarks, we should be out of the revolver. Depending on, you know, exactly where the final political number shakes out. And the priority for the political cash flow is to get the debt repaid. So again, depending on exactly where political shakes out, we should be, you know, we should be probably something in the low to midwives at the end of the end of the year, just depending on exactly where things shake out.

Pat LaPlatney: All right, next up with Mike Karein of tourist securities. Thanks for taking my question. I wanted to maybe try to ask the political question one slightly different way. You lowered your core guidance for the full year by about 75 million, and it looks like, you know, maybe part of that was due to, you know, the Q2 results were, you know, looks like core was maybe eight or nine lower than what you were expecting in Q2.

Pat LaPlatney: But how much of that, you know, the remaining like 66 to 67 million decline in your core guidance is from this placement or crowding out and how much is due to that weakness that you saw kind of at the end of the Q2. And, you know, expecting, are you expecting core to continue to be a little bit weaker or is that really just displacement from from political?

Pat LaPlatney: Yeah, I guess I'll start in Pat and Sandy can provide some color. I mean, if you look at our guide and we're and we're shaking out, you know, the revised billion five 25 that's still that's still up versus 23 despite the fact that we are going to be cramming a whole heck of a lot of political into the next 90 days. So I don't know that there's I don't know that there's a specific read through when we look at the business itself.

Pat LaPlatney: We've got we've got new local direct that's performing well. That's a barometer for the broader economic outlook that's out there. If from a data point of view, let me just say a specific data point. So if you compare our in the last presidential cycle, if you compare Q4 of 2020, the Q4 of 2019, we had about 10% displacement in the 2020 political cycle. So it's at least a data point that you can think about, but it's very difficult to put a specific number on exactly how much impact we're going to see there. I think that covers me.

Unknown Executive: Next question.

Kevin Latek: All right. The next question is from David Hamburger of Morgan Stanley. Thank you for the question. So your distribution revenue, the trends over the last few years continue to deteriorate and then I know you called out, you know, subscriber turns is being a primary driver of that now that you've locked in all of your distribution renewals for the next couple of years, I'm curious, you know, it seems as though the affiliate expense growth has has flattened.

Kevin Latek: So you have a pretty significant structural imbalance here. And I'm wondering, as you go into the next 18 months, renewal process with the networks, you know, what can you do and how can you position yourself to, you know, get some of the release that's necessary to get that back in balance. I mean, is it me trying to get more than networks onto a variable pricing model? Or, you know, how do you see reversing this trend that seems to kind of be a bit pernicious in your inner numbers persistent?

Kevin Latek: Sure. Hi. This is Kevin latex. We have seen probably a peak decline in our retransist quarter going forward. We should see the declines. There should be less and less. There's a couple of reasons for that, but we're not going to get into the details of our contracts. You're right, the network fee growth slowed and then has been largely stable the last couple years as the growth has now started to come down.

Kevin Latek: What we've said a couple of times kind of to reiterate it again is we, we and everyone else had a lot of discussions with the networks about what's happened to the growth side of equation and the subscriber numbers that underpin the assumptions that went into the network affiliation pricing. Certainly for us, we had models and I'm sure they had models and the number subscriber numbers have been not as good as we had expected.

Kevin Latek: And as a result of our expectations for not in the current contract, the next run of contracts, we will need to price what we're paying the networks more fairly, more appropriately. Remind you that we compensate networks through cash and through eyeballs and networks to arrive, between half and two-thirds of their revenue from selling advertising that appears in the affiliates markets, not their own and operated stations. Those ads that we are airing and our peers are airing on their stations are a significant amount of compensation for the networks.

Kevin Latek: The affiliates who are stronger local ratings are delivering more eyeballs to those network programs allowing the networks to monetize those network programs better than other opportunities. That is part of the compensation that we are providing now. So our conversation with the networks will continue to be that we are compensating you with these eyeballs which are above the affiliate average and we are compensating you in money and we need to set the amount we are compensating you at an appropriate level that rewards us for delivering what we are delivering in both eyeballs and dollars.

Kevin Latek: And that end result in our very strongly is that our network affiliation fees are too high for the current environment and we will need to be adjusted down in the next round and exactly how that happens is not something we can speculate because again those conversations happen 18 months over the next 18 months. A lot of people are going to negotiate with companies networks before them and a lot of things are going to happen in this industry no doubt over the next several months and years.

Kevin Latek: So we are not going to speculate on the exact outcome except the headline is that we need to cost to come down in order to remain affiliated to the networks and we expect that there is a number there that works for both parties.

Jeff Gignac: All right next up we have Richard Dernley of the long pause. Good morning. Could you the refine for five years? Was there any thought about turning a longer term for some of the debt? Yeah Jeff so yeah we evaluated the market we looked at a whole range of different opportunities and availability of capital and ultimately it came down to putting something in place that was the right balance of cost and tenor and that really accomplished our objective of getting rid of our 2026 maturities in the most efficient way with the best terms. Next up we have Craig Hubert.

Craig Huber: Yeah hi there.

Hilton Howell: On an assembly of landed can you just update us on what the final cost for the project will be net and gross at the end of this year and then also it sounds like based your commentary on your guidance for the rest of the work that maybe we should assume the first quarter next year and we sort of see if the meaningful return on that that benefits your PNL is that fair? I think that's fair at first quarter. Yeah yeah Craig on the other part of your question the final cost that was 571 571,000,000.

Hilton Howell: Okay, thank you very much.

Jeff Gignac: All right, and our final question for the day will be from Mike Kurein of Truist Security. Okay, thanks. Just one more question on the bond repurchase authorization. Are you guys planning to continue to only target the 7th of 27, or would you look at other bonds in my capital structure? Yeah, I think, look, I think we'll be guided by where the best return will be balancing the fact that we have a 27 maturity with where the pricing is at any point in time.

Jeff Gignac: So, and in the meantime, we don't have to execute on any of that. We do have 125 million more on the revolver, so it's totally opportunistic. We can, we'll be guided by what the markets tell us.

Hilton Howell: All right, if that was the last question, operator, I just want to thank everyone for your time this morning. We're very excited about the next time we get a chance to talk to you because I've got a, we'll be able to give you real numbers on this political race, which is evolving in a very positive way for the entire blockats industry. Thank you for being with us this morning and we'll talk to you in the river. Well, that's it, gentlemen.

Operator: This best concludes the call. We may now disconnect your lines, and thank you again for joining us today.

Hilton Howell: We are constantly looking for ways to entertain and inform our viewers. With this backdrop, I'm personally pleased to review our second quarter's results for our company with you today. Our total revenue in the second quarter was $826 million, an increase of 2% from the second quarter of 2023. Net income was $22 million in the second quarter, compared to $4 million in the second quarter of 2023. Adjusted EBITDA was $225 million, essentially unchanged from the second quarter last year.

Steven Cahall: And then to follow up on Dan's question, is there any way to think about the run rate of assembly EBITDAQ as you exit the year or something, and you have so many more studios kind of signed up and and chugging along there. I think we're all trying to understand what what that can mean for earnings generation in the in the years to come. And then maybe finally Kevin would just love to get a little more thinking on your subscriber outlook.

Steven Cahall: You know, you said that you're optimistic that subscriber declines could start to improve here at some point as a long media analyst. It isn't necessarily something I've observed much of in my career, but would just love to kind of compare notes on it and see when you think that might just start to happen. Thank you.

Q2 2024 Gray Television Inc Earnings Call

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