Q3 2024 Gray Television Inc Earnings Call
Okay.
Speaker Change: Thank you operator, and good morning, everyone and thank you all for being here.
As the operator mentioned I'm Hilton Howell, the chairman and CEO of Gray television and with me here in Atlanta, or all of our executive officers, Pat <unk>, our president and co CEO Sandy <unk>, our Chief operating officer, Kevin <unk>, our chief legal and development Officer, and Jeff <unk>, Our chief financial.
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Speaker Change: As usual, we will begin with a disclaimer that Kevin will print.
Kevin: Thank you Hilton and good morning, everyone, Great television, Inc, commonly known as Green media or Gray uses its website as a key source of company information.
Hilton Howell, McNamara Breland, and Stand Alert
Kevin: The website address is www gray media Dot com.
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Kevin: We'll file our quarterly report on Form 10-Q with the SEC today.
On the call, maybe a discussion of non-GAAP financial measures and in particular adjusted EBITDA.
Kevin: The leverage ratio denominator and certain leverage ratios. These metrics are not meant to replace GAAP measurements, but are provided as supplements to assist the public.
Kevin: And its analysis and valuation of our company.
Kevin: Included in our earnings release as well as on our website are reconciliations of these financial measures to the GAAP measures reported in our financial statements.
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Kevin: Certain matters discussed on the call may include forward looking statements regarding among other things future operating results.
Speaker Change: Welcome, ladies and gentlemen, to the Gray Media Q3 2024 Earnings Call. I will now turn the program over to Chairman and CEO, Mr. Hilton Howell, Jr.
Kevin: These statements are subject to a number of risks and uncertainties actual results in the future could differ from those expressed or implied any forward looking statements. As a result of various important factors that have been set forth in the Companys. Most recent reports filed with the SEC, including our most recent quarterly report on Form 10-Q, and our most recent earnings release.
Speaker Change: Thank you, operator, and good morning, everyone, and thank you all for being here.
Speaker Change: As the operator mentioned, I'm Hilton Howell, the Chairman and CEO of Gray Television.
Speaker Change: Company undertakes no obligation to update these forward looking statements now ill give the call to Hilton. Thank you Kevin.
Hilton: Meaning is an exceptionally strong company that has continued to grow and invest and evolve to meet the challenges and opportunities in our ever changing industry, we take great Pride and reporting to you every quarter great success in serving our communities and continuing to deliver financial results for all of our stakeholders as you all.
Speaker Change: As usual, we will begin with a disclaimer that Kevin will provide. Thank you Hilton, good morning everyone. Great Television Inc., commonly known as Gray Media or Gray, uses its website as a key source of company information.
The website address is www.graymedia.com
Speaker Change: Saw in this morning's earnings release Gray had a strong third quarter with our revenues largely in line with our guidance with the exception of slightly lower than expected political advertising revenues. In addition, you saw that our expenses were well below the low end of our guidance range as we continue to focus on ways to be more efficient specific.
Speaker Change: We will file our quarterly report on Form 10-Q of the SEC today.
Speaker Change: Included on the call may be a discussion of non-GAAP financial measures and in particular adjusted EBITDA.
Speaker Change: 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 valuation of our company.
The highlights for the quarter are as follows total revenue in the third quarter was $950 million, an increase of 18% from the third quarter of 2023 due to the increase in political advertising revenue net income attributable to common shareholders was $83 million in the third quarter compared.
Speaker Change: Included in our earnings release as well as on our website are reconciliations of these financial measures to the gap measures reported in our financial statements.
Speaker Change: Certain matters discussed in the call may include forward-looking statements regarding, among other things, future operating results. Those statements are subject to a number of risks and uncertainties.
To a net loss of <unk>.
Speaker Change: $53 million in the third quarter of 2023 <unk>.
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 reports filed with the SEC, including our most recent quarterly report on Form 10-Q and our most recent earnings release.
Speaker Change: Adjusted EBITDA was $338 million in the third quarter of 2024, an increase of 61% from the third quarter of 2023 core AD revenue in the third quarter of 2024 was $365 million.
Speaker Change: Company undertakes no obligation to update these forward-looking statements and now give a call to Hilton
Speaker Change: An increase of 1% from the third quarter of 2023 political AD revenue in the third quarter alone was $173 million, which was slightly below our guidance range.
Thank you, Kevin.
Hilton Howell: Great Media is an exceptionally strong company that has continued to grow, invest, and evolve to meet the challenges and opportunities in our ever-changing industry. We take great pride in reporting to you every quarter, great success in serving our communities, and continuing to deliver financial results for all of our stakeholders.
Speaker Change: But only $17 million below our political advertising advertising revenues and the record year of 2020 at the end of the third quarter, our leverage ratio as calculated in our senior credit agreement net of all cash was 567 to one as we repaid almost 250 million.
Speaker Change: As you all saw in this morning's earnings release, Gray had a strong third quarter with our revenues largely in line with our guidance.
Speaker Change: with the exception of slightly lower than expected political advertising revenues.
Speaker Change: During the third quarter and are looking at a total repayment of half a billion dollars.
Speaker Change: In addition, you saw that our expenses were well below the low end of our guidance range as we continue to focus on ways to be more efficient.
By the end of the year, we are proud that we have managed to grow our core AD revenue in the third quarter, despite some headwinds and political displacement.
Specifically, the highlights for the quarter are as follows.
Definitely strong station sales teams continue to drive core AD revenue growth, particularly within digital and new local direct sales channels by continuing to execute on the mission of delivering exceptional value and reach for our advertising clients.
Speaker Change: Net income attributable to common shareholders was $83 million in the third quarter, compared to a net loss of $53 million in the third quarter of 2023.
Speaker Change: Many of our southeastern markets suspended.
Speaker Change: Adjusted EBITDA was $338 million in the third quarter of 2024, an increase of 61% from the third quarter of 2023.
Speaker Change: Curtailed airing commercials in the last days of the third quarter as they ramped up coverage of the threat from Hurricane Helene and the terrible damage that followed we believe that our commitment to those communities made a significant difference before and after the storm and we believe.
Speaker Change: Core ad revenue in the third quarter of 2024 was $365 million, an increase of 1% from the third quarter of 2023.
Speaker Change: Political ad revenue in the third quarter alone was $173 million, which was slightly below our guidance range.
Speaker Change: Perhaps saved our number of lives, particularly in the affected areas of Florida, Georgia.
Speaker Change: Our North Carolina communities.
Speaker Change: but only $17 million below our political advertising revenues in the record year of 2020. At the end of the third quarter, our leverage ratio is calculated in our senior credit agreement, net of all cash.
Speaker Change: Our political AD revenue was very strong in the first half of the year relative to 2020, when you adjust for the absence of a competitive presidential primary in either party. We began the third quarter with strength and optimism as we saw all of the ingredients of a record political cycle.
Speaker Change: was 5.67 to 1 as we repaid almost $250 million during the third quarter and are looking at a total repayment of half a billion dollars by the end of the year.
Speaker Change: As we saw two years ago, many of the expected competitive races, and validation, we're simply not that competitive by labor day.
Speaker Change: We are proud that we have managed to grow our core ad revenue in the third quarter despite some headwinds and political displacement.
Speaker Change: Thereafter tremendous amounts of political AD spending shifted to a fewer number of more competitive races that largely fell outside of our station footprint, essentially Montana, and Pennsylvania, and then our third quarter political AD revenue was quite strong yet finished below our record third quarter.
Speaker Change: Our exceptionally strong station sales teams continue to drive core ad revenue growth, particularly within digital and new local direct sales channels, by continuing to execute on the mission of delivering exceptional value and reach for our advertising clients.
Speaker Change: Political AD revenues in 2020.
Speaker Change: For the.
Speaker Change: For the full year for 2024, we expect approximately half a billion dollars of political revenue, which as it appears to us makes us the largest recipient political AD dollars in the TV broadcasting business on both a gross and a.
Many of our southeastern markets
Speaker Change: Suspended and or curtailed airing commercials in the last days of the third quarter as they ramped up coverage of the threat from Hurricane Helene and the terrible damage that followed. We believe that our commitment to those communities made a significant difference before and after the storm and we believe perhaps saved a number of lives.
Speaker Change: T per TV household basis.
Speaker Change: That is something that we are exceptionally proud of because we reached 36 and some of our competitors double our reach so we're happy to be at the top of that pile of today's earnings release also highlighted that the company.
Speaker Change: particularly in the affected areas of Florida, Georgia, and our North Carolina communities.
Speaker Change: Our political ad revenue was very strong in the first half of the year, relative to 2020. When you adjust for the absence...
Speaker Change: Is not sitting still we are continuing our keen focus on developing local direct and digital business across our station footprint. We are continuing to produce news and investigated pieces that local audiences want in fact, we recently had Bob station and our National investigate unit best again.
Speaker Change: of a competitive presidential primary in either party. We began the third quarter with strength and optimism as we saw all the ingredients of a record political cycle.
Speaker Change: As we saw two years ago, many of the expected competitive races and ballot issues were simply not that competitive by Labor Day.
Speaker Change: Unit investigate TV.
Speaker Change: We received eight National Edward R. Murrow Awards for excellence in journalism.
Speaker Change: Thereafter, tremendous amounts of political ad spending shifted to a fewer number of more competitive races that largely fell outside of our station footprint, essentially Montana and Pennsylvania.
Speaker Change: We also are continuing to expand our local sports broadcast.
Speaker Change: On the expense side, we launched a significant cost containment exercise. This past August that touches nearly all aspects of the company as Pat will explain the leadership team here has worked hard to find more efficient ways to continuing delivering the highest level of service to our local communities and customers.
Speaker Change: In the end, our third quarter political ad revenue was quite strong, yet finished below our record third quarter political ad revenues in 2020.
for the full year for 2024.
Speaker Change: We expect approximately half a billion dollars of political revenue, which as it appears to us, makes us the largest recipient of political ad dollars in the television broadcasting business on both a gross
Speaker Change: Without impacting our values, our news coverage or our sincere commitment to our local communities.
Speaker Change: Reducing debt and leverage remains our top capital allocation priority, we have taken concrete steps to act on this <unk> and we will continue to do so until we have achieved our goals in this area. Our earnings release details. Our most recent efforts, which Jeff will address further later in the call looking.
and a per TV household basis.
Speaker Change: That is something that we are exceptionally proud of, because we reached 36 and some of our competitors double our reach. So we're happy to be at the top of that pile. Today's earnings release also highlighted that the company
Speaker Change: Ahead into 2025 and beyond we are taking actions necessary to be a stronger more efficient and impactful company that has the best equipped to compete in the ever changing business environment. What you read in today's press release and will hear in today's call will reinforce our commitment to positioning the company for long.
is not sitting still.
Speaker Change: We are continuing our keen focus on developing local, direct, and digital business across our station footprint. We are continuing to produce news and investigative pieces that local audiences want. In fact, we recently had five stations in our national investigative unit, Investigate TV.
Speaker Change: <unk> term success and now I will ask Pat to provide more color on our operations. Thank you Hilton.
Pat Hilton: Our core AD revenues this quarter were 1% higher than the third quarter of 2023, which was also 1% ahead of the third quarter of 'twenty two.
Received 8th National Edouard Murrow Awards for Excellence in Journalism.
We also are continuing to expand our local sports broadcast.
Pat Hilton: <unk> mentioned, our core AD revenue strength occurred despite a number of headwinds, particularly political displacement.
Speaker Change: On the expense side, we launched a significant cost containment exercise this past August that touches nearly all aspects of the company.
Pat Hilton: This achievement is driven by our success in recruiting new local businesses to advertise on our stations yet or digital platforms, our new local direct business. In Q3, 2024 was up almost 14% over Q3 2023.
Speaker Change: As Pat Will explained, the leadership team here has worked hard to find more efficient ways to continuing delivering the highest level of service to our local communities and customers without impacting our values, our news coverage, or our sincere commitment to our local communities.
Pat Hilton: In our local markets that are audited by a third party. The audit showed that we increased our share of the total local TV AD markets to new third quarter record. These results are very encouraging and gratifying, especially because many stations posting share growth in these audits did so as affiliates at CBS.
Speaker Change: Reducing debt and leverage remains our top capital allocation priority. We have taken concrete steps to act on this priority, and we will continue to do so until we have achieved our goals in this area. Our earnings release details our most recent efforts, which Jeff will address further later in the call.
Speaker Change: <unk> and Fox competing against a record viewership with the Paris Olympics. This summer our NBC stations performed well with the Summer Olympics generating north of $20 million, some of which was political advertising.
Speaker Change: Looking ahead to 2025 and beyond, we are taking actions necessary to be a stronger, more efficient, and impactful company that is the best equipped to compete in the ever-changing business environment.
Speaker Change: Digital AD sales continues to be a bright spot for us we're seeing year over year double digit growth rates and new records for digital AD revenue and new digital accounts nearly every month in the third quarter. We had 22 markets did more than $1 million in digital AD sales, which is a new record trucks.
Speaker Change: What you read in today's press release and will hear in today's call will reinforce our commitment to positioning the company for long-term success. And now we'll ask Pat to provide more color on our operations.
Speaker Change: In terms of political AD revenue Hilton provided a good description of the political AD landscape for us.
Pat Will: Thank you, Hilton. Our core ad revenues this quarter were 1% higher than the third quarter of 2023, which is also 1% ahead of the third quarter of 2022. As Hilton mentioned, our core ad revenue strength occurred despite a number of headwinds.
Speaker Change: Political AD revenues were from a historical basis quite strong going into third quarter.
Speaker Change: As the third quarter progressed. It appears the political parties felt there were fewer truly competitive Senate and gubernatorial races in our footprint.
Pat Will: particularly political displacement. This achievement is driven by our success in recruiting new local businesses to advertise on our stations and or digital platforms. Our new local direct business in Q3 2024 was up almost 14% over Q3 2023.
Speaker Change: We expected when the year ends we will see our political AD revenue in 2024 meeting or exceeding 2000 22020 numbers at the present herbal the house level state and local level as well as issue and ballot initiatives. The only category, where we saw revenue decrease occurred in the Senate races, which is long.
Pat Will: In our local markets that are audited by a third party, the audits show that we increased our share of the total local TV ad markets to a new third quarter record.
Speaker Change: But our largest political ad category.
Speaker Change: Yes.
Speaker Change: In 2020, our current station portfolio had about $331 million of political revenue from Senate races, including the two Georgia run offs versus 121 million of political AD revenue percent of races. This year.
Pat Will: These results are very encouraging and gratifying, especially because many stations posting share growth in these audits did so as affiliates of CBS, ABC, and Fox, competing against the record viewership of the Paris Olympics this summer.
Speaker Change: $200 million difference resulted from less spending and some competitive Senate races in our footprint. This year compared to 2024 in the end we brought in about half a billion dollars, which is a lot of money.
Pat Will: Our NBC stations performed well at the Summer Olympics, generating more than 20 million dollars, some of which was political advertising.
Pat Will: Digital ad sales continues to be a bright spot for us.
Speaker Change: Okay, and which will be used to pay down debt.
Pat Will: We are seeing year-over-year double-digit growth rates and new records for digital ad revenue and new digital accounts nearly every month. In the third quarter, we had 22 markets that did more than $1 million in digital ad sales, which is a new record for us.
Speaker Change: In most quarters since the end of the pandemic Raiders beat in the public peer group average year over year in core AD revenue performance and it appears that we led the peer group average again in the third quarter.
Speaker Change: Despite this momentum we anticipate the core AD revenues in the fourth quarter will be down compared to 23.
Pat Will: In terms of political ad revenue, Hilton provided a good description of the political ad landscape for us.
Speaker Change: For context in 2020 core AD revenue from our current station group declined 10% in the fourth quarter from the prior year due primarily to full displacement.
Pat Will: Our political ad revenues were, from a historical basis, quite strong going into the third quarter. As the third quarter progressed, it appears that the political parties felt there were fewer truly competitive Senate and gubernatorial races in our footprint.
Speaker Change: Covid pressures.
In Q4, 'twenty two our core AD revenue declined 4% from Q4 'twenty. One we also attribute a significant piece of our core AD revenue slowdown to the move of southeastern conference football from CBS to ABC. We are the largest CBS affiliate owner and we have CBS as our affiliation and many southeastern markets.
Pat Will: We expect that when the year ends, we will see our political ad revenue in 2024 meeting or exceeding 2020 numbers at the presidential level, the house level, state and local level, as well as issue and ballot initiatives.
Pat Will: The only category where we saw a revenue decrease occurred in Senate races, which has long been our largest political ad category.
I think Atlanta, Knoxville, Baton Rouge, Lexington, Waco College station among others.
Pat Will: In 2020, our current station portfolio had about $331 million of political revenue from Senate races, including the two Georgia runoffs, versus $121 million of political ad revenue for Senate races this year.
The replacement of Etsy, SEC with Big time will reduce corn political AD revenue in the fourth quarter.
Speaker Change: Overall for the full year 2024, we expect core AD revenue to be down slightly which is not unusual in a political year.
Pat Will: The $200 million difference resulted from less spending in some competitive Senate races in our footprint this year compared to 2024. In the end, we brought in about half a billion dollars, which is a lot of money, and which we'll use to pay down debt.
Speaker Change: On the expense side for the third quarter of 2024, our broadcast operating expenses and corporate operating expenses were $14 million and $3 million below the low end of the expense guide guidance ranges respectively.
For full year 'twenty four we currently expect broadcast backs and corporate opex to be significantly below significantly below our initial full year guidance provided in February.
Speaker Change: To prepare for 2025, we launched a major effort in August to review spending across the company to find ways to streamline operations without cutting back on the mission to serve our communities.
Pat Will: For context, in 2020, Corad revenue from our current station group declined 10% in the fourth quarter from the prior year, due primarily to political displacement and COVID pressures.
Speaker Change: Since August we've identified and begun implementing various initiatives that will allow us to reduce our operating expense run rate by approximately $60 million on an annualized basis.
Speaker Change: So closely valued.
Our capital expenditure needs for 2025.
Speaker Change: Most of our expense reductions about non personnel expense categories.
Speaker Change: We've also taken steps to reduce our personnel expenses.
Speaker Change: Beginning in August we eliminated positions by suspending recruiting and by not filling certain positions following attrition in the ordinary course.
Pat Will: Think Atlanta, Knoxville, Baton Rouge, Lexington, Waco College Station, among others.
Speaker Change: We also made some targeted reductions in head count.
Pat Will: The replacement of SEC with Big Ten will reduce core and political ad revenue in the fourth quarter. Overall, for the full year 2024, we expect core ad revenue to be down slightly, which is not unusual in the political year.
Speaker Change: Every individual who's directly affected has played an important role in the success of our company. These actions are personally difficult for everyone at gray and particularly painful for those impacted by the job restructurings.
They are however during for the company to operate more efficiently for the long term benefit of all other employees and the communities that depend on us.
Pat Will: On the expense side for the third quarter of 2024, our broadcast operating expenses and corporate operating expenses were $14 million and $3 million below the low end of the expense guidance ranges, respectively.
Sandy: Sandy will now address some important operational developments once again in the third quarter and into the fourth quarter Activations along the Gulf Coast served as a critical lifeline of information our community dealing with devastating storm, our trusted news and whether teams provided around the clock coverage of hurricane Francine Helene and Milton evenly.
Pat Will: To prepare for 2025, we launched a major effort in August to reduce spending across the company and to find ways to streamline operations without cutting back on the mission to serve our communities.
Sandy: Some of the homes of our own employee suffered damage from that storm.
Sandy: It's where local broadcaster that started their community.
Sandy: He didn't want the storm slow it down in late September we announced a significant media rights deal with the New Orleans delegate.
Pat Will: Since August, we've identified and begun implementing various initiatives that will allow us to reduce our operating expense run rate by approximately $60 million on an annualized basis.
Sandy: It rang every non national Pelican NBA game, it's a $4 1 million households through golf Coast Sports and Entertainment network, our new Multistate distribution center, that's anchored by our New Orleans television station.
Pat Will: We're also closely evaluating our capital expenditure needs for 2025. Most of our expense reductions involve non-personnel expense categories.
We've also taken steps to reduce our personnel expenses.
Continuing with this momentum our stations will be broadcasting an ever increasing number of local and regional gains from professional and college teams through this.
Sandy: And next spring.
We also made some targeted reductions in headcount.
From the Chicago Blackhawks.
Sandy: Blackhawks and White Sox gain to the NBA Maverick and the NHL cracking.
Pat Will: Every individual who is directly affected has played an important role in the success of our company.
Sandy: Finally, this brings me to a question we get asked sometimes by Investor as to why businesses political campaign and local sports teams want to be on local television.
Pat Will: These actions are personally difficult for everyone at Gray, and particularly painful for those impacted by the job restructurings.
Pat Will: They are, however, necessary for the company to operate more efficiently for the long-term benefit of all other employees and the communities that depend on us.
Sandy: Keep sharing our news ratings results, including a deep dive in in October 2023, Investor Day still I think it's worth answering this question with an interesting comparison between the top rated cable news show and our own local newscast.
Sandy will now address some important operational developments.
Sandy: Thank you, Pat. Once again, in the third quarter and into the fourth quarter, our stations along the Gulf Coast served as a critical lifeline of information for communities dealing with devastating storms.
Sandy: In the third quarter of 2020 for the Fox News program <unk>, which.
Sandy: Which is available in 67 million homes closing more viewers than any program on cable with an average of $3 5 million viewers.
Sandy: Our trusted news and weather teams provided around-the-clock coverage of Hurricanes Francine, Helene, and Milton, even while some of the homes of our own employees suffered damage from those storms. But we didn't let that slow us down. In late September, we announced a significant media rights deal with the New Orleans Pelicans.
Sandy: That's impressive but not nearly as impressive as great five P. M newscast, which are available in 36% of U S households.
Sandy: Secondly, our five PM newscast averaged $4 4 million viewers.
Sandy: It brings every non-national Pelican NBA game to 4.1 million households through Gulf Coast Sports and Entertainment Network, our new multi-state distribution venture that is anchored by our New Orleans television station.
Sandy: It's 25% more viewers than the five.
Sandy: Fight, reaching less than one half as many home think about that that is the power and reach of local broadcast television and that's the reach that local businesses political campaign and local sports teams need one they can get from grain media. We're obviously very proud of the great work of our news teams from co.
Sandy: Continuing with this momentum, our stations will be broadcasting an ever-increasing number of local and regional games from professional and college teams through this fall and next spring, from the Chicago Bulls, Blackhawks, and White Sox games to the NBA Mavericks and the NHL Kraken.
Speaker Change: Because in these rating show our loyal viewers appreciate and depends on their important work I'll now turn the call over to Jeff. Thank.
Finally, this brings me to a question...
Jeff: Thank you Sandy the team has already covered our Q3.
Jeff: Our outlook. So my comments will focus on our balance sheet.
Speaker Change: Ladies and gentlemen, it looks like we lost the speaker's line. We will get them back on promptly.
Jeff: <unk> mentioned earlier, reducing debt and leverage remains our top capital allocation priority. We continue to improve we continued to improve our balance sheet in Q3 during the quarter, we reduced our outstanding debt principal balance by $246 million, returning our first lien and total leverage levels to three <unk> dot.
And 567 times, respectively. This is in line with the levels. Following our early June refinancing and the sequential.
Jeff: And a sequential improvement.
John Kupinski, John Kupinski, John Kupinski,
Of approximately a quarter turn of leverage from June 32024.
Jeff: The debt reduction during third quarter was completed through a combination of open market repurchases under our previously announced board authorization and repayments at par. In addition to the previously announced $29 million repurchase of our 2027 notes at 92, 1% of par, we repurchased approximately 16 million.
Jeff: Of our 2021 term loan B at an average price of just under 91% of par.
Jeff: During Q3, we repaid the full 200 and that was drawn under our $680 million revolving credit facility at June 30.
Jeff: Also during Q3, we entered into agreements whereby we will retire an additional $39 million of our 2021 term loan.
Jeff: At an average price of 92, 6% of par, which we expect to close in November of 2024.
Jeff: Looking forward for full year 2024, we expect to reduce our total net debt outstanding by approximately $500 million.
Jeff: We announced this morning that our board has authorized a reset of our open market repurchase authorization to $250 million and we will continue to take a balanced approach and look to capitalize on opportunities to efficiently reduce our debt.
Jeff: One notable to do our free cash flow outlook that I'd like to highlight is on the tax side.
As you may have seen in our release, we determined during the course of filing our 2023 tax return that the portion of our interest expense attributable to real estate, primarily due to assembly Atlanta coming online is fully deductible rather than limited under the IRS rules as a result, we expect to benefit from that deduction and our cash tax payments.
Jeff: This year and on a go forward basis.
Jeff: So to summarize we're continuing to execute on the plan and pulling the levers that we have available to us to generate cash flow. The actions that we've taken on the expense side, a closer look at our capital needs and repaying our debt to reduce our interest burden all enhance our cash flow profile going into 2025.
Speaker Change: Concludes my remarks, and I will now turn the call back to Hilton for some closing remarks. Thank you Jos operator at this time, we ask you that you open up the line for any questions for any of our leadership team.
Speaker Change: Ladies and gentlemen at this time, if you would like to join the question queue. You can press star one on your telephone keypad.
Speaker Change: Once again Thats star one on your telephone keypad to join the question queue.
Speaker Change: And that will joining or we will take our first question from Aaron Watts at Deutsche Bank.
Aaron Watts: Hi, everyone. Thanks for having me on.
Aaron Watts: I have a couple of questions.
Aaron Watts: First I have a question around your core AD guidance I'm, hoping you can parse out your <unk> down 10, 5% guide a bit more.
Aaron Watts: Are you able to say how much of that was weather related and that would be really helpful to hear what you're seeing in the post election core AD environment generally areas of strength weakness et cetera, and how things feel turning the corner into 2025.
Aaron Watts: I guess second Jeff I'd point your way with regards to the $60 million of run rate savings you announced how should we think about the timing of that phasing in and hitting the P&L over the next several quarters.
Are there any further cost actions you're.
Aaron Watts: You're exploring in any ways to kind of frame that incremental opportunity.
Aaron Watts: And then finally, just regarding capital allocation it sounds like the focus remains on debt reduction do.
Aaron Watts: Do you envision continuing to be in the market repurchasing front end loans and bonds.
Aaron Watts: Do you think about the timing of potentially accessing the capital markets to address your first maturities and has there been any further consideration on reducing the dividend.
Aaron Watts: Yeah.
Speaker Change: Thanks, Aaron its patent flattening I'll start Q.
Q4.
Speaker Change: Number of factors at play here right. So there's there's political crowd out we talked about SEC.
Which is for us is material.
Speaker Change: And then.
Speaker Change: We have some.
I would say that I would say going forward, which I think was the thrust of your question.
Speaker Change: We are cautiously optimistic about the remainder of the quarter, we have seen some green shoots.
Speaker Change: Just in the last couple of days, which we think is a good sign and to be candid not completely unexpected so.
Speaker Change: Better the more improvement we see in Q4, the more optimistic we are about Q1, 'twenty five and the remainder 25. So I think there is.
There is some reason for optimism there.
Speaker Change: Jeff I know you got a bunch of questions.
John Mcdonald with a I'll try to tick through them in the order in if I Miss anything just weigh in so first of all on the $60 million run rate savings and the timing of those.
I guess.
Speaker Change: Most of that especially the personnel piece of that is already completed.
So that's already we're already we've already achieved that it's in the rearview mirror and that will start filtering through I think you should think about that as much as anything.
Speaker Change: Bending the curve if you look over the last cut.
<unk> of years.
Quarters, you've seen our run rate on expense growth come down so you'll continue to see that come down.
Speaker Change: As a result of these actions there there are a number of things that were renegotiation of contracts and workflow changes that we were able to make.
Speaker Change: <unk> will take a little bit longer, but it'll be in starting beginning of the year and first quarter.
In terms of further cost actions look we're continuously monitoring it but theres nothing specific that's been identified as of right now so.
Speaker Change: We'll continue to look at things, but nothing else planned at the moment.
Speaker Change: Capital allocation so the.
Speaker Change: You can see that we reloaded the $250 million authorization from the board. So we're going to continue to be guided by where we can get good value.
Speaker Change: We can go it's not had any tranche of that and so.
Speaker Change: We will look at where things are trading we will look if theres an opportunity to tap the capital markets.
Speaker Change: At a reasonable price that doesn't.
Speaker Change: Work against Us too much in terms of cash flow and Delevering, that's certainly of interest.
And then on the dividend.
Speaker Change: You can weigh in on this as well, but I would say that we looked at it from quarter to quarter and.
Where we sit today.
Speaker Change: We're comfortable paying it for this quarter I don't know if you want to comment any further on that.
Speaker Change: No further comment right now.
Speaker Change: Alright, Thanks, guys I appreciate the thoughts.
Ron: Thank you Ron.
Alright next step we havent more land here in a row.
Speaker Change: Thank you for taking my questions you actually just addressed many of them are quick.
Speaker Change: Quick window in terms of the political is it possible to provide some.
Speaker Change: You know number around potentially the impact from the Hurricanes, specifically, meaning you know what.
Speaker Change: Political has been without that hurricane impact. Thank you just.
Speaker Change: It's a few million dollars.
Speaker Change: Okay, great. Thank you.
Alright next definitely have Patrick Sholl on Barrington research.
Thank you.
Speaker Change: I was wondering with.
Deep political.
Speaker Change: You are seeing any difference between.
Speaker Change: Maybe local affiliates and networks and just sort of your opportunities within selling them the.
Speaker Change: Station apps and.
Speaker Change: And the ability that you were able to capture some viewing share shift there.
Pat Hilton: Hi, Pat.
Speaker Change: Patrick we didn't you kind of cut in and out there could you repeat that question I'm sorry.
Speaker Change: Yeah, I guess, what I was trying to ask was.
Speaker Change: Any sort of shifts between.
Speaker Change: Political in buying local stations.
Speaker Change: Versus our networks.
Speaker Change: Or is it time to buying on the networks person and that's it.
Speaker Change: Our ability to.
Speaker Change: So political inventory on the station apps versus in the linear broadcast and being able to capture any of that share shifts there.
Speaker Change: Yeah.
Speaker Change: No.
Speaker Change: If you look through our political results, we talked about this a little bit.
Speaker Change: Sure.
Speaker Change: All of our categories were up in all the different categories of political spending were up with the exception of set out which historically has been far away our largest.
So we the money the money was there in the market and you just got shifted out of our footprint essentially in a lot of it Sheldon mentioned landed in Pennsylvania and Montana.
Okay.
Speaker Change: And then just within the core AD verticals are you seeing any sort of.
Speaker Change: Like strengths or weaknesses across different categories or industries.
Speaker Change: Yes.
Speaker Change: During during third quarter. It was a mixed bag auto has been weak for us. It was it was weak in third quarter candidly, it's weakened fourth quarter.
Speaker Change: Communicated communications category has been somewhat weak.
Speaker Change: And then look given we talked a little bit about political crowd out but there was also there was political hesitancy as well people hold onto their money.
Speaker Change: Either nodding to beyond the air during the day.
Speaker Change: Onslaught of political ads or you know not really understanding what the economic outlook would be depending on which party prevails. The elections right. So that impacted a lot of different categories. As we talked about before we're starting to see some green shoots coming out of the election.
Speaker Change: So we're cautiously optimistic, but we would expect.
Speaker Change: Most of those categories to improve for the remainder of fourth quarter that pick up next year, Yeah, and just one other interesting note on that even with the strong political in October a new local direct is up over a year over year fueled mainly by digital and that's consistent with a laser focus we've had on growing new local direct.
Speaker Change: Okay. Thank you.
Speaker Change: Oh, Yeah, that's definitely have Doug pardon.
<unk> capital management.
Speaker Change: Hi, good morning, guys.
Speaker Change: Just wanted to change directions, a little bit lost in the noise of.
Speaker Change: Some bad luck, maybe with the political and the Hurricanes.
Speaker Change: Retrans kind of beat our number on a on a both a gross and a net basis and it looks to me like Retrans expense might be down on the year can you just talk a little bit, but that's something you have to talk to you and we'll talk a little bit about that and your confidence as you look at Retrans next year, because I think that's been up.
Speaker Change: Probably one of the biggest concerns for investors and then I have a couple more after that.
Speaker Change: Hi, Doug this is Kevin.
Speaker Change: Our our core.
Speaker Change: Core Retrans has been.
Speaker Change: It's really a growth mode for a long time and we certainly saw.
This year.
Speaker Change: We went from being from growing a little bit growing a lot growing a little bit in this year alone. We went backwards and we talked a lot on the prior calls we've been getting the rate increases we want.
Speaker Change: I'm really struggling with the sub erosion.
Speaker Change: Our sub numbers are.
Speaker Change: And you see this for all media companies that sub.
Speaker Change: Situation has not been getting much better.
Speaker Change: There are some hopeful signs in the recent Comcast and charter.
Speaker Change: Sub reports that it may be there sub losses have stabilized.
Speaker Change: We were predicting that the sub declines with stabilized earlier this year.
Speaker Change: Seems that now have folks kind of coalescing around the idea that it's probably later this year, maybe next year, we see the sub decline the rate of growth slowing.
Speaker Change: Our map or I should say of our gross revenue in this area is really a simple formula it's a rate times the number of subs for each to vote for each of the operators.
Speaker Change: As the sub numbers.
Speaker Change: Clients.
Speaker Change: Mitigate our growth will improve it.
Speaker Change: Beyond our control and it's kind of that simple.
Speaker Change: Talked a lot about why we think we should be seeing that rate of growth slows will go into that again.
Speaker Change: But we are certainly optimistic its going to be.
Speaker Change: We have seen kind of the worst of it now and we're going to move forward with.
Speaker Change: A world with the sub declines are muted and I think you've heard that from some of our peers and some third party folks as well.
Speaker Change: On the on the network fees, we've said for a while that the number of tests need to come down they will reprice it.
Speaker Change: <unk> world under different factors and their spend.
Speaker Change: We've had some success with our contracts we start bringing those fees down we have more work to do we have a lot of.
Speaker Change: More work to do over the next.
Speaker Change: Roughly 14 months as we renegotiated with all four networks for the next round of contracts and I can tell you that the focus on costs, which every quarter, we've talked about bringing our costs below.
Cutting our cost guide and the actions we disclosed on our earnings call. Today, I think are pretty clear that we're really focused on bringing our costs down and that's not just operational cost.
Speaker Change: And that is going to include our network fees. So.
Speaker Change: We're not giving any guidance obviously on next year, but.
Speaker Change: Those are the kinds of ingredients of things. We're looking at yeah. Let me just emphasize one point that let me just emphasize one point that Kevin made the $60 million does not include anything related to any network agreements.
Speaker Change: Great and then just changing gears on the political side is there anything structural about your footprint that causes you concern or was this just simply a case of bad luck.
Speaker Change: Actually we didn't have any backlog, we had half a billion dollars, which is the largest gross number of political ads of any peer in the broadcast sector.
Speaker Change: So the really only evidence.
Speaker Change: You guys did you did kind of at least Smith People's expectations and I think it's.
It's because of just where some of these races, Matt So I'm not trying to I'm just trying to.
Speaker Change: I understand that a little bit.
Kevin Hilton: This is Kevin I'd I'd come back to be more money in presidential and we did four years ago, we made more money than in state and local races than we did four years ago, we made more money in house races than we did four years ago, we have more money in ballot initiatives. We did four years ago, all which was consistent with our expectations.
Kevin Hilton: Going into this year, our internal expectations, and I think where everybody else got ahead of it whereas the Senate.
And we had.
Kevin Hilton: We look at the results today and we see.
Kevin Hilton: Really really close resolve and places where gray has a big footprint, Arizona, and Nevada, Wisconsin, Michigan.
Kevin Hilton: And frankly, the spending was not spending by both sides did not match the way to the polls worked out and this happens from time to time, sometimes theres a lot of money spent and it candidate is turns out to be.
Kevin Hilton: Well ahead of another candidate and you had a ton of money was wasted on that race. We theres a couple of examples of that just this week and there are sometimes the flip side. There are a races, where not a lot of money was spent are nowhere near as much as people expected because the polls indicate just sort of comment it turns out that the competitor was a lot stronger with the race was a lot tighter than people expected.
Kevin Hilton: Unfortunately again for us that was for Senate races.
Kevin Hilton: It happened to be states, where gray stations and most if not all of the markets. So this is entirely a story about Senate races for gray is not about money, leaving our markets. We got the same political share of dollars that came in the market that we got four years ago. We excelled in every category, but there was a short.
Kevin Hilton: Fall from what we would've expected.
Kevin Hilton: In a handful of very expensive Senate races.
Kevin Hilton: That's the story is not about.
Kevin Hilton: We people ahead of us of expectations, and we have internal expectations, which we obviously never share because we believe it's really really hard to predict these races with any kind of.
Kevin Hilton: Certainty and we've said that in 2022 quite a bit and other folks they felt confident to give political guidance and thats their right and.
Kevin Hilton: Political estimates on broadcasters and Thats People's right, but we've cautioned that it's really really difficult and lots of people are going to exceed and some people are going to Miss just based on factories completely beyond our control and I think you've seen that not just with gray and our Senate outcome, but I think you've seen that in the whole sector. Some people really beat.
Kevin Hilton: The street's expectations and some did not that's based on factors that none of us can control. So long as we're getting our market share. We're doing what we can but we can't force a party to spend another $100 million in the state of Nevada, which may or may not have changed the outcome of the race there.
No that context is exactly what I was looking for Super helpful. So long and short of it no structural issues with the footprint.
Speaker Change: My last is just more of a comment I know people asked about the dividend. We are shareholders. So I would just point out that we think you know the ability to take some of that cash and buy back debt at significant discounts is really helpful for shareholders reduces interest expense and you kind of combat compound that over time, it could really help with your deleveraging strategy, but.
Speaker Change: Thank you guys for the questions.
Speaker Change: Thanks, Tom I appreciate the comments.
Okay.
Speaker Change: Alright next definitely haven't Craig Huber Huber research.
Thank you.
It's easy for you I'll go one question time.
On the regulatory front with the New administration, starting January 20th here, what is your expectation for any potential changes ownership cap regulatory environment for M&A and the broad media space in General let me start there. Please.
Speaker Change: Yeah.
Speaker Change: We would expect that the FCC will be deregulatory.
Speaker Change: Ownership and much and just as importantly, if not more importantly for our future on.
<unk> three point on Nextgen matters.
Speaker Change: In a series of operational issues.
Speaker Change: For broadcasters and other regulated entities.
Speaker Change: In terms of specific policies, that's going to depend on the outcome of some pending court cases further guidance from the court on the FCC's.
Speaker Change: Actual jurisdiction and absolutely who the commissioners are going to be so I would say broad strokes headlines, we see of Deregulatory FCC coming.
Speaker Change: Think we're really in a position to be handicapping specific policy issues right now.
Speaker Change: And then longer term.
Speaker Change: What is your goal here if your net debt to EBITDA ratio.
Speaker Change: On a two year basis.
Yes.
Speaker Change: A two year basis Greg.
Speaker Change: Longer term the company has been.
Speaker Change: It has levered up to make acquisitions, and then aggressively repay debt I think we are proving that we're getting back to the repaid debt piece of that by our actions so far and our expectations for the rest of the year.
Speaker Change: And so look longer term.
Speaker Change: It gets more comfortable when we're below four but I realize that's a little ways away still so.
Speaker Change: We have the liquidity, we have the runway from a maturity profile point of view.
Speaker Change: To get there, it's just going to take it it's going to take you know beyond the 26 political cycle. When we've got the next big influx of cash.
Speaker Change: Two.
Speaker Change: To get us back down into the into the fours.
Speaker Change: And ideally.
Speaker Change: But right around that four times number longer term.
Speaker Change: Next question guys on the cost cutting front, you talked about $60 million.
Speaker Change: Do you feel is theirs.
Speaker Change: Significantly more cost you can take out in another round here as you think over the next 12 plus months without doing damage to the business of course, yes, I would say yeah, I don't I don't think that Theres necessarily look we did a pretty thorough review here.
Speaker Change: And we're going to we'll continue to watch things and as things come up we will be aggressive on renegotiating I think.
Speaker Change: <unk> cost savings side for a more impactful will be.
Where we land on the affiliate renewals.
Speaker Change: So the pinch point in time bad as 2025, and we renew all of them over the next 14 months. So that's the next.
Speaker Change: Next part of the discussion.
Okay.
Speaker Change: Last question on the core advertising outlook for the fourth quarter down 10% or so.
Speaker Change: Would you mind I know this is hard to get to if you would.
Speaker Change: Justice political crowding out.
Speaker Change: I see football you chatted about stuff, where do you think that number would have.
Speaker Change: So close to flat or slightly down what do you think.
Speaker Change: The SEC crowd out from FCC crowd out plus FCC.
Speaker Change: Where do we go.
Speaker Change: Good.
Speaker Change: Yes.
Speaker Change: We would have a lot more inventory to sell.
Speaker Change: With without.
Speaker Change: Without the political crowd out and.
Speaker Change: Then the SEC the SEC.
Speaker Change: Moving to big 10 on our CBS moving to big ton from FCC.
Speaker Change: Costs us a couple of it cost us a few points in terms of the change in the in the overall revenue line item.
Speaker Change: You take that.
Again, the political crowding out.
Remove those do you think you'd be much closer to flat or.
Speaker Change: And so when it gets it but what do you think the underlying growth is right now in the marketplace.
Speaker Change: Yeah.
Speaker Change: Just for those two items.
Speaker Change: Look there's a lot of noise in it right now it's hard to quantify a specific number on that and we really haven't historically.
Speaker Change: Quantified what exactly we think the crowd out number is what we can tell you is what we see in the data as we sit here today and as Pat described in our guide covers that as Pat described it there's.
Speaker Change: Theres reasons for cautious optimism from here.
Speaker Change: <unk>.
Speaker Change: Based on what we're seeing but it's it was there is hesitancy to commit for the near term and so we're starting to see some of it but it's too hard to give a specific number on any of this stuff right now.
Speaker Change: Okay fair enough. Thank you guys.
Speaker Change: Thank you.
Alright next definitely Michael Corinne.
Speaker Change: Securities.
Hey, good morning, Amit.
Speaker Change: Thank you for all the color on political right.
Wanted to follow up on the regulatory question.
Speaker Change: Specifically about.
Speaker Change: The potential opportunity for you guys. If you were allowed to own more than one station in a market is that something that would be a huge opportunity for your margins and operational costs of you were able to.
Speaker Change: Consolidate.
Speaker Change: What kind of a single market.
Speaker Change: This is Kevin.
Depends on the station we acquire.
Speaker Change: We have.
Speaker Change: 113 markets, we have lots of markets with more than one station if the second station we acquired.
Speaker Change: As a CW or a my network or a telemundo its not particularly helpful. If we require a big four affiliates it doesn't have any news.
Speaker Change: And we put news on it.
Speaker Change: Theres not theres going to be certainly additional revenue, but not a lot of cost to take out if it's two stations that have.
Speaker Change: Pretty significant overlapping.
Speaker Change: Tasks and facilities.
Speaker Change: Then there's more synergies.
Speaker Change: The industry just went through 15 years of create.
Speaker Change: Creating duopolies and I think there is a pretty good track record of companies.
Speaker Change: <unk> synergies when theyre buying in market.
Speaker Change: Stations with local news, where they already have the local news station so.
Speaker Change: The amount is going to completely dependent on the market and the type of stations that we're putting together.
Speaker Change: So.
We're obviously.
Speaker Change: We've been pretty active in that space and we would expect to continue to be active if opportunities present themselves in the balance sheet permits it.
Speaker Change: Alright, that's all I had thanks.
Speaker Change: Yeah.
Speaker Change: Alright next definitely have bill Matthews and U S G.
Speaker Change: Hi, great. Thank you for taking the question many of my questions have been answered.
Speaker Change: Why don't I kind of wanted to circle back on some of the comments that you've made in terms of the sub losses.
Speaker Change: A huge concern.
Speaker Change: Beyond your control.
Speaker Change: Political spending in predicting races very difficult to predict.
Speaker Change: And then the cost saves of $60 million.
Speaker Change: What's clearly in your control common.
Speaker Change: Common dividend and the dividend to the preferred.
Speaker Change: <unk> had a previous.
Speaker Change: The person who has an equity holder voice that it would be helpful for the equity.
Speaker Change: To reduce your debt.
Speaker Change: So is there a conversation in the boardroom is there a voice in the boardroom.
Speaker Change: That is advocating to take that $80 million and even pause it for a year until you get your leverage down.
Speaker Change: Yeah.
Speaker Change: Yeah.
Yes, so it's Jeff so.
Speaker Change: Like I said, we talk about this on a quarterly basis.
Speaker Change: The 80 million that you referenced includes the preferred dividend so from a rating agency standpoint, they can.
Speaker Change: Count that as debt they count that up they count that as an uptick in that so really the savings from a and from an equity point of view. It's in front of it's in front of the equity holders. So we think about it as the $30 million whatever discount you could capture.
Speaker Change: With the full 30 or 80, if you went down that route that route.
Speaker Change: We talk about it each quarter and we'll continue to evaluate where things are in the business with the leverage profile et cetera.
Speaker Change: As we move into 'twenty.
Speaker Change: I mean, I would just follow up there is $440 million of interest expense on the debt. The series a preferred is piccolo instrument at the board's discretion and if you look at the equity reaction today to the results I think theres, a lot, you're managing and managing well.
With what you have.
Speaker Change: Compounding the difficulty with the leverage and if so if you can eliminate that leverage that value will accrue to the equity.
Speaker Change: Yes, I understand I'm, just I guess the point that I was making is that if we pick the preferred.
Speaker Change: It works against what you are.
Speaker Change: It works against that calculation thats $50 million that works the opposite direction by picking.
Speaker Change: But point taken I understand your point.
Speaker Change: Okay. Thank you.
Speaker Change: All right next up we have Alan Gould.
Speaker Change: Capital.
Thanks for taking the question.
Speaker Change: Broader question on political.
Speaker Change: It seems like political fund raising was higher than ever.
Speaker Change: And if I look across the spectrum. This is more of an industry question. It looks like almost every player with the potential exception of Fox.
Speaker Change: Gonna have.
Pointing at relatively short of expectations on political advertising. So are we seeing a reallocation of political dollars out of broadcast.
Speaker Change: TB people spending more time on podcasts to reach the audience is there a structural change occurring and also related to this.
No look typically for Q political used to be 75% to 100% greater than three Q, we're not seeing that this year was there some pull back.
Speaker Change: The reason why <unk> was so much weaker relative to its normal results versus re queue. Thank you.
Speaker Change: Yes.
Speaker Change: Okay, you're going to start with the <unk>.
Speaker Change: I wouldn't put a number a bunch of new yes, okay sure yeah look so so.
Speaker Change: We believe some money is going towards CTV, but I don't we don't believe theres any kind of sea change there there is more money going in there and other media.
Speaker Change: Used to be I think.
I think that's pretty basic but it's not something that's foundational or structural or four.
Speaker Change: Any of those great words at the end of the day.
Speaker Change: A change but for us the impact in our political was simply a function of money moving from state to state.
Speaker Change: In terms of the your question around the fourth quarter, I think Kevin and.
Speaker Change: Kevin Yes, yes for sure, but if I go back to 2018.
Speaker Change: Our combined historical 2018 to 2020.
Speaker Change: So I'm talking about the our current footprint.
Speaker Change: Our fourth quarter was 55% of the total 55% of the total of 50% of the total of 51% of the total.
I don't see a sea change here.
The third quarter, our political revenue was 30%, 32% and 28%, 35%. So the allocation of the dollars is frankly pretty stable across the four the one thing that.
We have seen slightly change our primary presidential primary to pull some more money into the first quarter.
Speaker Change: State and gubernatorial election, those primaries tend to be a Q2 event. So sometimes we see a bit more and certainly in 2018, and 22, which is a very heavy on gubernatorial races, you see sort of a bigger Q2, but.
Speaker Change: We've never talked about Q4 is a factor of Q3.
Speaker Change: Instead to look at how the dollars have been allocated by quarter over the last now four cycles with our current footprint.
Speaker Change: We're seeing the fourth quarter was <unk>.
Speaker Change: Consistent with the others it was a bit more than half of the total in the fourth quarter in the third quarter was about.
Speaker Change: Right around 30% to 35%.
Speaker Change: Every year.
I'm not really seeing that.
Speaker Change: The numbers reflect.
Speaker Change: Any particular.
Speaker Change: Concern here for Greg.
Great.
Okay.
Okay. Thanks, Pat Thanks Kim.
Speaker Change: Sure thing.
Speaker Change: Yeah.
Speaker Change: Oh right next definitely Daniel corner of the benchmark company.
Speaker Change: Yeah. Thanks, good morning.
Speaker Change: I'll take it.
A little one step further hilton on regulatory.
Speaker Change: D C not the FTC Congress to eliminate the ownership cap.
What's your openness to some kind of transaction buyer seller merger in order to unlock incremental value stock.
Speaker Change: Yeah, I think that'd be very open to consider anything.
Speaker Change: Yeah.
Speaker Change: That's helpful.
Speaker Change:
Speaker Change: Pat Nitpicky, but the shift from SDC.
Speaker Change: On the local network change there is there any cash.
Speaker Change: Cash flow ramification or is that all just a revenue impact.
It's revenue.
Okay and then.
Speaker Change: Yeah, Jeff appreciate the deep dive on the expenses just trying to get a sense and obviously you mentioned you know the big Delta could be on the affiliate side, but.
Speaker Change: How do we think of <unk>.
Speaker Change: 24 going into 'twenty five.
Speaker Change: You know you need to reinvest something in growth or head count.
Speaker Change: What are the.
Speaker Change: That's to what you've just taken out or can we just.
Speaker Change: Look at where we think the year ends up and then <unk>.
Speaker Change: <unk> got our kind of our run rate here.
Speaker Change: Yes so.
Speaker Change: At a macro level I would say this is against the current run rate.
Speaker Change: There will be there will still be some typical adjustments that you might see for.
Speaker Change: Employee raises and things like that going into going into 'twenty, five sort of the natural stuff in the business. So.
Speaker Change: I think what we've talked about here is to bend the curve flatten this out and ideally try to bring it down where we came out on our last call. We talked about taking a very thoughtful approach and so the things that we the things that we did a really more managing the business in a smart way.
Speaker Change: And thinking about how can we do things in a better way, but still serve the communities still make sure we have local news and all of our markets all of the things that are hallmarks of the success of this company.
Speaker Change: Gotcha.
I'll sneak one last one in I guess, maybe for Kevin just on.
Speaker Change: Political.
Speaker Change: <unk>.
Speaker Change: Looking at 2006, obviously theres going to be some.
Speaker Change: I think to try to.
Speaker Change: Combat.
Speaker Change: Just happened so and then in 2008, we have two open primaries theoretically.
Speaker Change: I don't know if that gives you any more confidence I know obviously you guys have spent the entire call today, telling everybody that you did a good job.
Speaker Change: And political but.
Speaker Change: Yes.
Speaker Change: Helps frame, how we should be thinking about.
Speaker Change: The competitive nature of the raises in the next two cycles relative to your footprint might be helpful.
Speaker Change: Youre absolutely right at 26, we should have not one but two presidential primaries, we've not had that for quite some time now.
Speaker Change: I'm, sorry, 28, 28 and 26.
Remember that the Senate being up every six years, we gave sort of a random selection of competitive versus uncompetitive races.
Speaker Change: The off year is always very very big with gubernatorial races.
Speaker Change: State races.
I do not anticipate that.
Speaker Change: This election is going to unify America, and we're going to suddenly have a.
Speaker Change: Quiet not terribly competitive.
Round of elections in two years I suspect, we'll continue to see.
Speaker Change: Hi, political engagement and high Stakes.
Speaker Change: For both parties.
Speaker Change: Yes. It is I, just don't see things becoming.
Speaker Change: Returning to any kind of.
More calm political situation.
Speaker Change: And the next two or four years that people will continue to be engaged with.
Speaker Change: We're more complicated issues.
Speaker Change: Okay.
Speaker Change: Okay. Thanks for bearing with me guys I appreciate it.
Jim: Thank you Jim.
Jim: Yeah.
Jim: Oh right next definitely haven't even cable wells Fargo.
Speaker Change: Thanks for squeezing me in maybe first with a more favorable FCC deregulatory backdrop can you just expand on maybe end market duopoly opportunities I know this question came up before but I'm. Just wondering if you think the FCC might allow just threes and fours go to even allow us to.
Speaker Change: Isn't there.
Speaker Change: And if theres any way to size or dimensionalize, what a significant opportunity that could be for the industry and love to hear more on that.
Speaker Change: Sure Kevin.
You both talked about.
Speaker Change: The reverse compensation expenses, you know a big focus for next year. Just wondering how early you start to have those conversations with your major counterparty theyre going through a lot of management changes I don't know if that makes things easier or harder and if you've learned anything from some of the recent peer renewals, but we're just not.
Speaker Change: We get some more color there as well thanks folks.
Speaker Change: On the FCC look we don't know exactly who to five commissioners are going to be.
Speaker Change: There are a number of pending court cases involving FCC decisions and broadcast area and non broadcast areas.
Speaker Change: That will inform their authority.
Speaker Change: So I don't know quite how we could start opining on whether the new FCC rule may look like that.
Speaker Change: The proposed at what point next year by what FCC, given what new Guardrails may be imposed as a result of depending court cases, and remember there is also a court cases not involving the FCC that address administrative law that can also impact with the SEC can do.
So I don't know how to again go say anything more than we expect the SEC will be deregulatory, and we think that they will address ownership and three point out.
Speaker Change: But I don't know, who who has that crystal ball and if so I wish they would've told us.
Speaker Change: The results of the election, a couple of days ago.
I just think that's impossible on network, our network conversations tend to happen.
Early close to the exploration date, we start talking months earlier, but they tend to like retrans tend to get serious towards the very end.
Speaker Change: ABC is up end of this year CBS Fox next summer NBC ended the year. So again I think those conversations will get series a month or two beforehand.
Speaker Change: And I don't know last question, Peter I Havent learned anything from my peers.
Speaker Change: Recent renewals because we have no absolutely no clue, what the terms are and any other network affiliation agreement other than our own literally have not no. One talks about it all we can say is the aggregated number reported by public companies.
Speaker Change: Across all of their all their network contracts. So we literally have no we have no Intel on what our peers are paying the networks or what their structures are.
Speaker Change: Absent what they would say on a public.
Speaker Change: Earnings call. That's that's all of the insight we get so I don't know how to.
How to answer that any more sort of clearly except we've been very clear about our own situation and the strength of our stations and what we deliver to these networks in terms of reach and eyeballs that they monetize for advertising.
Speaker Change: And then they use to promote their programs that they then monetize in the aftermarket.
Speaker Change: So we know our situation they are delivering and that's what we're going to talk about.
Speaker Change: Hope that helps.
Speaker Change: Okay.
Speaker Change: Alright next definitely have David Hamburger of Morgan Stanley.
David Hamburger: Thank you very much for taking the question.
Speaker Change: Jeff last quarter, you had mentioned that you expected leverage to end the year in the low to mid fives.
Can you update us on where you think leverage will now shake out for the year end.
Speaker Change: How should we think about 2025 I know you spoke about kind of longer term, but can we expect to see some.
Speaker Change: Debt reduction next year and how.
Speaker Change: How will you execute on that.
Let me, let me take the second part first.
Speaker Change: 25, some of the actions that we took are designed to make sure that we have the ability to continue to pay down our debt going into 25. So that's part of the overall plan with respect to where we finish 'twenty four.
Speaker Change: Depending on.
Open market activities and things like that we should be flat to maybe slightly down from where we are today.
Speaker Change: For the third quarter by the end of the year.
Speaker Change: So okay.
Speaker Change: We're running late into the first after our earnings call at that where we need to get to.
Speaker Change: So at this point, we're going to need to wrap up.
Speaker Change: And the public calls and apologize that we see there is a couple of other folks on the queue. I think we have calls scheduled with all of you individually so.
Speaker Change: So we do need to and is to stay on schedule for the rest of the day.
Speaker Change: Alright, well thanks, everyone for being here, we're actually quite proud of our quarter and most particularly we're happy we stack up against our peers in terms of our both our core and our political advertising and we're particularly proud that by the end of the year, we will have paid off half a billion dollars in debt.
Speaker Change: Were actually.
Speaker Change: Actually pretty impressed with them pretty proud off. Thank you all for spending time, and we look forward to talking to you next quarter.
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: All right, ladies and gentlemen that does conclude your call. You may now disconnect your lines and thank you again for joining us today.