Q4 2024 Gray Media Inc Earnings Call
Okay.
Speaker Change: Ladies and gentlemen, thank you for holding your call will begin momentarily.
Speaker Change: Once again, thank you for holding your call will begin momentarily.
Speaker Change: [music].
Speaker Change: Good morning, and welcome ladies and gentlemen to the Great Media 2020 for Q4 earnings call.
Speaker Change: Or you'd like to ask a question you May press star one on your telephone keypad at any time during the call.
Once again Thats star one on your telephone keypad to join the question queue.
Speaker Change: Without further Ado I will now turn the program over to chairman and CEO, Mr. Hilton Howell.
Speaker Change: Thank you so much operator and good morning, everyone.
Speaker Change: The operator mentioned I'm Hilton Howell, the chairman and CEO of Graham media.
Speaker Change: Thank you all for joining our fourth quarter 2024 earnings call with me here as usual Atlanta, all of our executive officers patent the plot me, our president and co CEO Sandy Greenland, our Chief operating officer, Kevin Latex, our chief legal and development Officer, and Jeff <unk>, Our Chief Financial Officer.
Speaker Change: As usual, we will begin with the riveting disclaimer that Kevin will provide alright. Thank you Hilton.
Speaker Change: Great introduction good morning, everyone. Today, we file on form 8-K, our earnings release and Investor presentation. Later today, we will file with the U S. You see our annual report on Form 10-K. These materials are all available on our website, which is www gray immediate dot com.
Speaker Change: On the call maybe a discussion of non-GAAP financial measures and in particular adjusted EBITA Webex.
Speaker Change: 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 in its analysis and valuation of our company.
Speaker Change: Or are there discussing further discussion and reconciliations of the company's non-GAAP financial measures to comparable GAAP measures can be found on our website all statements and comments made by management during this conference call.
Speaker Change: Other than statements of historical facts should be deemed forward looking statements. These forward looking statements are subject to a number of risks and uncertainties.
Speaker Change: Actual results in the future could differ from those described in the forward looking statements as a result of various important factors that are contained in our most recent filings with the FCC.
Speaker Change: We undertake no obligation to update or revise any forward looking statements, whether as a result of new information future events or otherwise and I now turn the call. The Hilton. Thank you, Kevin and you do that particularly well good morning again, everyone.
Speaker Change: Many reasons today.
Speaker Change: He has a great day to discuss with you the state of our company and its direction. This past Sunday on NBC and obviously all of our NBC affiliated stations gross point Garden's Society. The first of the broadcast shows produced at our own Assembly Studios premiered at 10 P.
Speaker Change: Eastern time.
Speaker Change: This Monday.
Speaker Change: C B S.
Speaker Change: First new soap opera and over 30 years beyond the gates also shot at Assembly premiered at three P. M. Eastern time, and then every day so far this week on all of our stations and across the country.
Speaker Change: Significantly the gates is a co production between CBS and the Endo Boule C. P that focuses on a very successful African American family in Maryland, The Dupree family a milestone show in broadcast history, and we are exceptionally.
Speaker Change: Proud to help get it all the air out of Assembly studios here in Atlanta.
And Tonight, we are thrilled to reinforce the news that across 24 Gray television markets.
Speaker Change: Atlanta Braves Americas team will debut on live television from spring training in Florida today.
Speaker Change: <unk> game against the Washington Nationals will be the first of 10 pre season games produced by grade that will air across Braves nation, and we will follow up with 15 regular season games simulcast across the same footprint.
Speaker Change: These are accomplishments that we are truly proud off now, let's turn to our financials.
Speaker Change: We are very happy to announce that all of the results for the fourth quarter finished better than our guidance on both revenues and expenses total revenue in the fourth quarter of 2024 was $1 billion, an increase of 21% from the fourth quarter with 2023.
Speaker Change: Total operating expenses in the fourth quarter of 'twenty 'twenty four were 2% below the low end of our previously announced guidance.
Speaker Change: Net income attributable to common stockholders was 156 million in the fourth quarter of 2024 compared to a net loss attributable to common stockholders of 22 million in Q4 was <unk> 23.
Speaker Change: Adjusted EBITDA was $402 million in the fourth quarter of 24, an increase of 86% from the fourth quarter of 2023, due primarily to political advertising revenue.
Speaker Change: In addition to these operating results we're proud with the progress we made on our balance sheet.
Speaker Change: The fourth quarter.
Speaker Change: Just two weeks after our third quarter earnings call, we announced that we had completed a series of transactions that collectively reduced the company's pencil amount of debt outstanding by 278 million since October 1st during the full year 'twenty 'twenty four we reduced the company's total principal.
Speaker Change: That $520 million exceeding our half a billion dollar goal.
Speaker Change: The announcement was a fitting way to complete the year in which we executed on our pledge to concentrate our free cash and reducing our debt and improving our balance sheet. In addition to reducing our total debt during the year.
We also refinanced our debt to extend our maturity dates increased our revolving loans available oh greatly lowered our capital spending as we completed numerous projects.
We finished the year with a lower leverage ratio than when we began the year.
Operationally, we continue to enhance our local content offerings in 2024.
Speaker Change: We devoted tremendous efforts to reaching new.
Speaker Change: Local sports back to our TV stations last year's milestones included a historic deal as I had mentioned earlier.
Speaker Change: Atlanta Braves games back to broadcast.
Speaker Change: Raise television stations in our hometown of Atlanta and throughout most of the southeast this great.
Speaker Change: We also renewed our affiliation agreement with the ABC network for four additional years in 2024 or investigate T D and local news live franchises. Both continued their momentum with viewers and both also significantly expanded their distribution across broadcast digital and.
Speaker Change: Mobile platforms.
Speaker Change: The success and N B C U N C. B S. I'd Assembly studios provides wind in our sales as we continue discussion about leasing our remaining studio facilities with other production companies, we expect to have more announcements about our St. Louis Atlanta throughout this year that will include.
Speaker Change: Progress on the buildup of other parts of our mixed use campuses on the land that we own.
Speaker Change: Portland are utilizing financial resource of our future business partners at the site.
With our significant capital investments now largely behind US future projects at Assembly Studios and Assembly Atlanta should enable the development to expand its financial contributions to our entire company.
Speaker Change: Also encouraged by signs from Washington, According to a long overdue reform of the regulatory constraints that are literally harmed local broadcasters.
Speaker Change: [noise] well every day, we compete for local AD dollars with Tech Giants free from constraining rules that were shackled with which is one of our more eloquent lawyers wrote were enacted before the Japanese bombed Pearl Harbor.
Speaker Change: It remains a fundamentally wrong and harmful policy for the guy in the world to burden, our local news and sales employees with these decades old restraints, while imposing essentially no restraints a much larger companies, who compete vigorously with us so the attention of viewers and advertisers.
Speaker Change: Budgets, we are optimistic that the federal government.
Speaker Change: As well as our upcoming negotiations with our network partners CBS Fox and NBC well recognize the reality of today's media marketplace in 2025.
Speaker Change: Such actions will enable us and our peers to operate more efficiently compete better against the tech Giants and deliver better services for our viewers are advertisers and indeed, our shareholders. At this time I would like to turn it over to Pat with platinum.
Pat: Thank you Don.
Speaker Change: Last year, our business remember primarily from pull up lab revenues.
Speaker Change: Broadcast is overall check and record revenue from political AD spending in a lot of new dollars that entered the space, we're used to buy ads on connected TV.
Speaker Change: Great also sells ads on connected TV platforms and has a dedicated team focusing on ways to better leverage our strong digital audiences and local connections and the political AD space and should we expect that sector to grow going forward.
Speaker Change: Overall in 'twenty four we saw increases in each category of political AD revenues other than furniture, which is our largest category.
Speaker Change: Despite the Senate, Matt not favoring greatest footprint in 'twenty 'twenty four.
Speaker Change: Still believe that our political advertising revenues for the year exceeded our peers in total dollars and on a per TV household basis based on the results announced by our peers right after the election.
Speaker Change: The $250 million of political AD revenue in the fourth quarter had the expected effect of displacing a large amount of core advertising revenue through election day, that's happens every election year.
Speaker Change: As we mentioned on the Q3 call. We also heard from our commercial advertising clients in the third and fourth quarter about some hesitancy around advertising during election, given the tone of some of the political campaigns. We did however, exceed our Q4 guidance core guidance.
Speaker Change: Hesitancy of caution around advertising, we saw during last fall's election season persisted into January we think resulting from economic uncertainty due to potential government policy changes.
Speaker Change: This caution is most evident among our automobile advertising customers. We're hearing of some dealers and manufacturers are pausing or reducing their advertising campaigns as they evaluate how tariffs and continued high interest rates may impact near term demand for new and used cars.
Speaker Change: Our January core AD revenues were down from last year.
Speaker Change: February core AD revenues were about the same as last year's excluding Super Bowl bookings and leap day.
Speaker Change: In March Pacings are currently showing improvement and tracking roughly flat to last year's actual core ad revenues.
Speaker Change: Overall for the first quarter of 2025, we currently expect a core advertising revenue will be down 7% to 8% compared to the first quarter of 'twenty four.
Speaker Change: There are three primary factors, causing this decline first is the political or economic uncertainty that I just discussed the second impact on core results was from the Super Bowl airing on our 33 Fox channels in 2025 compared to <unk> 54, CBS stations in 'twenty 'twenty four Fox stations did very well increasing.
Speaker Change: They're Super Bowl advertise your revenue by about 50%.
Speaker Change: Last time, the big game aired on Fox in 2020 three.
Speaker Change: This however was still only about half of what we sold during last year's Super Bowl there David across a much larger C. B S footprint, including our CBS station and the chiefs hometown of Kansas City, as well at St. Louis Topeka and Wichita.
Speaker Change: Finally, our first quarter of 'twenty 25 will be negatively impacted by one less billing day due to leap day, which which we estimate impacted our core revenue by three and a half to $4 million.
Speaker Change: Excluding Super Bowl and Leap day impact our core advertising revenue guide for the first quarter 'twenty 'twenty five is down 3.3% to 4.6% from the first quarter of 2024.
Speaker Change: We are encouraged by our success in acquiring pro sports rights Hilton mentioned, the Braves, which will impact 'twenty four gray market.
Speaker Change: We announced our Memphis Grizzlies deal this morning, and expect to announce a couple more agreements in the next few weeks.
Speaker Change: We anticipate having local sports product is 75 to 80 gray markets by the end of the first quarter with that I'll turn it over to Jeff.
Jeff: Thanks, Pat assortment as Hilton mentioned earlier, reducing debt and leverage remains our top capital allocation priority and we made significant progress again in the fourth quarter.
Jeff: As everyone saw in our release, we finished the year at 2.97 times first lien leverage and 5.49 times total leverage.
Jeff: And as an aside I would note that our leverage ratio as defined in our senior credit agreement does not allow us to take credit immediately for cost containment initiatives.
That may not be comparable to what is indicated by publicly available documents for others out there. So it's.
Jeff: But to be clear, we've not retroactively included the benefits from the $60 million of cost initiatives, we announced last quarter.
Jeff: In our December 31, 24 calculations, we are however on pace to be at the full $60 million run rate by the end of this quarter.
Jeff: We've been very transparent not an opportunistic on our debt reduction efforts and are proud that we reduced our principal balance by $520 million during 'twenty 'twenty four.
Jeff: Through use of open market repurchases, we captured $46 million in debt discounts during 2024.
Jeff: We continue to have our $250 million board authorization available for further open market repurchases.
Jeff: And I think as we've pretty clearly demonstrated we will continue to be thoughtful and nimble and deploying our liquidity to further delever the company.
Jeff: We entered 2025 and a very strong liquidity position.
Jeff: As of December 31, 24, we had $135 million in cash plus 600 wells are $680 million revolving credit facility available.
Jeff: We expect that the next political cycle in 2026 will provide significant cash that together with the liquidity that I just mentioned will be more than sufficient to address our remaining 528 million dollar twenty-twenty southern bond maturity.
Jeff: While repaying debt as our number one capital allocation priority. We could also access the debt markets at attractive terms and pricing are available.
Jeff: A couple of other items mentioned, our cash taxes were a little above our Q4 guidance, that's primarily due to taxes on cancellation of indebtedness income.
Jeff: And our Capex excuse me our Capex came in slightly below our got our fourth quarter guide at $96 million and we expect slightly lower capex again in 2025.
Yesterday, our board of directors declared a regular quarterly common dividend of eight cents per share and the cash payment of our quarterly preferred dividend.
As a reminder, the common dividend as a small use of cash for the year that helps the company on the equity side of the balance sheet and going forward. The board will continue to evaluate our dividends in light of our financial position capital needs and other appropriate factors on a quarterly basis.
Jeff: Before I turn the call back to Hilton a couple of comments on what we're seeing on Retrans.
Jeff: Over the last two years, our traditional M. B P. M. B P. D subscriber base has declined essentially the same year over year overall rate.
Jeff: We're encouraged however by recent sub reports from major cable company is showing a modest improvement in their rate of sub declines, which we attribute to a number of factors that have been discussed on many of our prior calls, including better consumer value proposition by staying with cable.
Jeff: As you know we entered into a four year affiliation agreement with a b C. At the end of last year.
Jeff: That agreement and the upcoming renewals this year with the other broadcast networks provide opportunities for us to rebalance the economics of those deals in light of the M. B P D subscriber erosion.
Jeff: And loss of exclusivity that have occurred since our last renewal cycle.
Jeff: It's worth noting that our network affiliation fees increased for many years at double digit rates over the past few years those network affiliation fees have flattened out.
Jeff: And even better we booked the first ever year over year decrease in network affiliation fees in 'twenty 'twenty, four which we anticipate will continue and even accelerate.
Hilton Howell: This concludes my remarks, and I'll now turn the call back to Hilton.
Hilton Howell: Thank you very much Jeff and now operator, I'd like to open up the call to any questions that anybody may have.
Speaker Change: Absolutely, ladies and gentlemen at this time.
Speaker Change: Star one on your telephone keypad, if you would like to ask a question that is star one on your telephone keypad, if he would like to ask a question.
Speaker Change: And so far it does look like what look like we have several in queue. So we'll take the first one Mr. Aaron Watts of Deutsche Bank. Your line is now open.
Aaron Watts: Alright, Thanks for having me on I have two questions maybe I'll just cover one at a time. The first is around core advertising your comments on the softness at the end of 'twenty four and into twenty-five seem to echo your peers.
Given the modest firming up you saw as <unk> played out as you look ahead do you think core ads can move the growth on a full year basis, and if so what might drive that.
Aaron Watts: Yes, Aaron its Pat So I think the answer is yes.
Aaron Watts: We are you know it's early but we are encouraged by the second quarter pacing currently some of those categories that have been challenged over the last four to six quarters.
Aaron Watts: Showing improvement at this point.
Aaron Watts: So again based on the data we have today I would say I would answer yes to your question and I'd say that you know.
Aaron Watts: As we look out a little bit things are more encouraging.
Aaron Watts: And Aaron.
Aaron Watts: And I had just a little bit of some things that we discuss this at length in our board meeting yesterday, you know a lot of our the you know the the weaknesses in the automobile department and really for the first time since the end of the second war the.
Aaron Watts: Automobile production is don't know if it's a cost of goods sold are going to be so many parts come from Mexico, and Canada and other places around the world as you discuss tariffs I think that's putting a natural chilling effect upon advertising in the automobile sector that will settle out as.
Speaker Change: President Trump has said there may be some initial pain this too will pass and when they know exactly what the prices they need to have to sell their products profitably and they can see all of the automobile sector returning to advertising.
Speaker Change: Okay. That's helpful commentary. Thank you and then my my second question is around expenses in the first quarter can you parse out your guide and which looks relatively flat year over year, how much of the cost efficiencies you've highlighted flowed through in the first quarter and what other factors are at play.
Speaker Change: There, including maybe any incremental sports rights and then if you can how should we think about expenses overall as the year unfolds.
Speaker Change: Yeah, Erinn I'll kick off and others can weigh in so as we think about what.
The flow through of the initiatives that we've announced.
Speaker Change: You do start there's probably quite a handicap at its two thirds to 75% of it is going to be flowing through in Q1.
Speaker Change: And then it will build from there.
Speaker Change: It also doesn't mean that.
Speaker Change: It doesn't mean that we're necessarily dawn and we look at everything every day and try to be really smart about where we're spending so I think for the full year.
Speaker Change: You know our our hope is that we'll be able to as we've said before keep the overall rate of growth on the expense side below inflation and potentially even get it to turn negative during the year.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: Just real quick I would amplify we're just saying we look at.
Speaker Change: These numbers every day and are trying to find ways.
Shouldn't you rein in costs and I can think of a few initiatives over just the last three or four weeks where.
Speaker Change: May not have been part of the Big project.
Speaker Change: We announced in fourth quarter, but.
Speaker Change: Like Jeff said, we're looking at it every day.
Speaker Change: And so offsetting some of those costs.
Speaker Change: Costs, you're taking out what what were some of the kind of offsetting.
Speaker Change: The ops and costs that are playing into the flat overall guidance in <unk>.
Speaker Change: Yeah look we we didnt, but we still have to run very strong local businesses and we have to attract and retain the talent across the firm and so we.
Speaker Change: We did give raises that are ordinary course of business type things. So when you have.
Speaker Change: 9700, or so employees in the company you know that that there's some uplift there there's some normal increases and other things that just are contractual but what other other than that I mean, it's really like Pat said, it's looking for more the most efficient way to continue to deliver a very high quality product in.
Speaker Change: The markets that we serve.
Speaker Change: Okay I appreciate the time thank you.
Aaron Watts: Thank you Aaron.
Speaker Change: Yeah.
Speaker Change: All right next up we have Daniel Carnose at the benchmark company.
Speaker Change: Great. Thanks, Good morning, maybe I'll stick with you or Pat a little bit here since you talked about the Braves, obviously, we have a somewhat public breakout between major League baseball and E. S. P. N. So just curious on the Rs ends it picked up a bunch of.
Speaker Change: Local games and other sports, but curious if you view that as an opportunity and then separately you know.
Speaker Change: Hilton you've talked a lot about expanding sort of the mixed use zones with regards to assembly. It seems like that's starting to move forward. So love to get a sense from you on Tam tiny monetization just how we should think about the contribution to that either this year next year or however, you want to frame it well.
Speaker Change: You know you heard this and and Pat's discussion. So let me start with sports first of all right.
Speaker Change:
Speaker Change: It's a remarkable opportunity I think by the end of this quarter Pat articulated to you guys that we will have live professional local sports and 80 something markets across our 113 market profile that's amazing.
Speaker Change: And we have been working assiduously, a year ago, we had Arizona and the sons and now we have stations across our footprint. If you take a look at our investment deck. Daniel you can see our sports networks. The Gray regional sports networks that we've created on our own all of them.
Speaker Change: I'd cast.
Speaker Change: And we are immensely proud of what we were able to do not just with this professional sports with local sports teams.
Speaker Change: Go down to the high school level across these networks. So I think that's going to be really really.
Speaker Change: Hugely additive in terms of our viewership and our profits because it creates an immense a halo around the stations and it attracts viewers and a year ago. We didn't have that it's a great. Great addition to our portfolio now assembly.
Speaker Change: The studios are finished they are making shows and as I mentioned.
Speaker Change: I mean, you guys know I mean, some people take me about assembly I'm immensely proud of pledged Rosko Garden's Society on NBC did Sunday night and.
Speaker Change: Remarkably proud really remarkably proud of beyond the gates in terms of the productions that are now on our stations and so from a business standpoint, I could not be happier with Assembly studios and the Georgia film production that we have in this state.
Speaker Change: Now in terms of phase two I'm not in a position.
Speaker Change: To prudently announced anything but we are looking at growing other assets largely in partnership with other companies without a lot of folks that have come to us and we do not have a large capital expenditure budget and assembly. So it will be another contributor.
Speaker Change: Our land they put in whatever they decide to do and we will add more profitable operations to it not using our balance sheet dramatically at all.
Speaker Change: But it will allow the remaining.
Speaker Change: 80, something acres to begin adding <unk>.
Speaker Change: Profits to the broader company, which we're very excited about so I hope I answered your question David.
Speaker Change: Dan I'll just touch on ESPN real quick in baseball you know I'm not sure that's a huge opportunity for broadcast as Hilton mentioned, there's all kinds of opportunities out there that particular sort of divorce. If you will I'm not sure that creates a ton.
Speaker Change: The Sunday night package right is that going to end up in syndication I kind of doubt it but who knows but the reality is you know just if you. If you look at our new investor deck, a logo sup page on the sports section I mean, there are there is a lot of there are a lot of baseball that's going to land in small packages.
Speaker Change: <unk> TV this year more evolved in many of those that I touched on the.
Speaker Change: The sort of a halo impact of having sports on your stations that I'm going to turn it to sandy to talk about that for a SEC Asbury real yes. It is.
Speaker Change: These relationship not only bring viewers to the game, but there's an overall halo effect and we're seeing that in Phoenix is a perfect case study. We're in our second full season with the time and we have seen that we have seen advertisers who came to us for the game now rediscovered the power of broadcast and local broadcast reach Internet advertising and other day parts.
Speaker Change: So we've seen that halo effect across the board.
Speaker Change: Yes. It is very comprehensive guys. Thank you and Pat we will see how they end up carving it out maybe though.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: Interesting.
Speaker Change: Yeah.
Speaker Change: Alright, moving right along next definitely have Craig Huber Huber research.
Speaker Change: Oh, thank you.
Speaker Change: Assembly Atlanta, maybe could you just give us the updated figure for what the total cost is for the project gross and the net costs when we start there. Please.
Speaker Change: Land cost acquisition cost building cost is roughly $500 million more or less.
Speaker Change: Specific numbers are in the 10-K.
Speaker Change: Following later this afternoon.
Speaker Change: Alright, so roughly five 500 net.
Speaker Change: So what you're saying.
Speaker Change: Yeah, another grocery wholesaler.
Speaker Change: Got it and then.
Speaker Change: I think you're talking about 27% to $28 million up production company revenue in the first quarter that'd be up I guess $5 million to $6 million over a two year basis do you expect that number to ramp up significantly is putting aside seasonality.
Speaker Change: Our progress and I'm, just trying to get a sense here of the oral why that you're getting off that $500 million.
Speaker Change: Answer is yes.
Speaker Change: A couple of things to keep in mind.
Speaker Change: The immediate impact will be added revenue as more production build because I'm sure a lot of you guys know right now Hollywood. However, you wanted to find out you know who's got has got a lot of issues and none of those are under our control and none of that was created by our company but.
Speaker Change: The strikes slowed everything in 'twenty 'twenty four but as you can tell productions continue and I'm really quite excited about not just what we have currently in place and the TV shows showing in for the first time in Georgia, We actually got a broadcast television show everything before went on screening or.
Speaker Change: On cable and and you know we got a gross point the gates on our stations and I could not be happier.
Speaker Change: We're probably 70% occupied in the stages. So I think there's about a 30% maybe more upside just in terms of booking and we have literally close out for every station that is not currently filled with a film and TV production.
Speaker Change: So where we're seeing.
Speaker Change: We're seeing a lot of more robust activity in the film and television production side, while I can't talk to you about the individual stuff because often sometimes I really don't know like when we're doing the deal. It comes under a code name and you will get a production real question I have no idea other than who the company is you know what the actual production is because they kind of keep it under.
Speaker Change: Wraps until you know until really the last moment, because they like to control their own publicity. So immediately you're going to see it through the.
There's a return on the studios, but we have another 80 acres that is not currently adding value and as I mentioned, we're not going to spend a lot more capital, but were going to enter into partnerships for a variety of assets is.
Speaker Change: Because it's in Atlanta thing you know sort of the inspiration for what has been done at the battery with the Braves, which has added immense value to the Braves franchise and to their audiences.
Speaker Change: Sort of what we're looking at as a comparable in this city, we're gonna take it deal by deal and step by step and you know we delayed everything because the market wasn't right.
Speaker Change: People banks weren't lending and you know the world kind of changed in November there's a lot of animal spirits that we're seeing out there. So we're very bullish about opportunities and partnerships going forward.
Speaker Change: And my second question, if I could on potential deregulation here do you guys feel that you will be a major a significant participant if deregulation happens to your fastest come available out there or does your debt load preclude you from <unk>.
Speaker Change: So pretty much how are you thinking about that.
Speaker Change: Well I mean look we're going to do if we do a deal it will be a smart deal. There are a lot of things that we would be very interested in doing deregulation occurs as we.
Speaker Change: Had been indicated it will there are opportunities for swaps there are opportunities for acquisitions and you don't go the way we'd been in this position before.
Speaker Change: And we've done a number of acquisitions actually delevering acquisitions.
Speaker Change: So we will be looking at that but there is an opportunity and this is a finite universe.
Speaker Change: And you know, we'll take each deal and each opportunity as it comes one of the happy things about our company.
Speaker Change: Is that Theres no must have deals we need to have we have and I suggest you look at it I think we have the finest of pets treads in broadcast history. There is no peer in our industry that could have delivered what we delivered to the Braves embrace nation plentiful markets. If you look at what we have and what we can do.
Speaker Change: He was quite remarkable but you can look in our investment deck that we published I think today.
Speaker Change: And you can look at that being true and Arizona throughout Nevada throughout the American Midwest throughout the other southeastern States that you know are not the same but you know what we've done in the Gulf coast with the Pelicans, we're thrilled with absolutely thrilled with.
Speaker Change: And we hope to replicate that in a lot of places because while you got to have the major markets Gray has the smaller markets that really root for these changes.
Speaker Change: My last question you guys talked about the potential here for Retrans sub declines to moderate I'm just curious if maybe you're willing to share with us how are you guys budgeting.
Speaker Change: Sub declines in your financials for this year.
Speaker Change: Expecting it to materially get better say in the back half of the euro year over year basis.
Speaker Change: Yeah, Hi. This is Kevin are we do expect the ratings have declined to 12.
Speaker Change: Saying all of last year.
Speaker Change: We have seen some encouraging signs late last year as have other folks in the media industry have expressed that our internal numbers are assuming things stay the same.
Speaker Change: But we're not giving full year guidance on Retrans. So that's just an internal number.
Speaker Change: We were not projecting a material increase or decrease we're.
Speaker Change: Presuming this up.
Speaker Change: Radio decline will just be the Santos the easiest baseline to budget.
Speaker Change: Okay very good. Thank you vote. Thank you all.
Craig: Thanks, Craig.
Speaker Change: Oh right.
Avi Steiner: Now exactly have Avi Steiner at J P Morgan Chase and company.
Speaker Change: Thank you.
Avi Steiner: Thank you and good morning.
Speaker Change:
Speaker Change: On the reverse comp trends, you mentioned, an opportunity to rebalance economics, and I think you rightly pointed out the decrease in fees in 'twenty four I thought you mentioned it could be lower than 25 could you dimensionalize that for us this year or maybe put a little more context around it. Thank you and then I have one more.
Speaker Change: Yeah, it's Jeff So where are we.
Speaker Change: We.
Speaker Change: We have the are too large or too larger contracts CBS and Fox are up the summer.
Speaker Change: And then N B C. At the end of the year and so I don't want to say a lot about about specifics around where were those contracts need to go other than to say that.
Speaker Change: They're pretty out of balance at the moment and so.
Speaker Change: Intentionally not going to be giving a full year guide until we have more clarity on where those negotiations are going to come out.
Avi Steiner: But suffice it to say Avi, we're very optimistic and we're very proud again, okay I disclose it but we're very proud of our new relationship with ABC I hope it properly balances the value of their affiliation with the value of our local television stations and as has been mentioned in our earnings scripts.
Speaker Change: It's the first time, we've actually started.
Speaker Change: So a decrease in our network like payments.
Speaker Change: And I think that's very important in today's world and its a recognition of reality, but the media broadcast space in 2025.
Speaker Change: Perfect I appreciate that thank you for that color one last one for me.
Speaker Change: Maybe Jeff for you or anyone else, but you guys were opportunistic late last year across the debt stack and as we move into 'twenty five you have the authorization you highlighted.
Speaker Change: Some other cash come again.
Speaker Change: The question is how do you view the tradeoff from here between discount on the longer dated debt, but lower coupon debt versus some front end needs you will have.
Speaker Change: In the coming years. Thank you.
Speaker Change: Yeah, I think look I think the best place to look is what we did last year the market guided where we were going I did want to finish the year with a manageable twenty-twenty southern maturity and so at 528 million that is.
Speaker Change: Whose manageable either via the revolver or a nice round offering size. If we went back to the debt market. So I think we're just going to have to see where things go.
Speaker Change: Where things are trading at any point in time, when we have excess cash available to deploy it and and what that would be our guide.
Speaker Change: And how we can say at this time. Thank you go ahead.
Speaker Change: Just one piece of it maybe sort of a color to what you were asking about like all of our Capex deal, which everybody's got to realize that this company did a lot of acquisitions over a substantial period of time, we have announced quite candidly that we were cutting back on our capex well that is.
Speaker Change: What that is is in recognition of is that we basically have done all the capex that we inherited cause we picked up a lot of portfolios that work, where they needed to be you know a lot of stations needed transmitters that we picked up a lot of stations had really really.
Speaker Change: Not secure buildings that have that kind of apparel some of our employees, who have a variety of capex and so we naturally have finished that luck cutting at all leaving our stations.
Speaker Change: You know short of what they need they are fully prepared to fight and win the battle that they have in their markets and we're very excited about that.
I appreciate the time, thank you everyone.
Speaker Change: Yeah.
Speaker Change: All right, ladies and gentlemen, before we move onto the next one I just wanted to remind participants you can press star one on your telephone keypad, if you would like to join the queue.
Speaker Change: That is star one on your telephone keypad to join the question queue.
Stephen Cahill: The next definitely had that Stephen Cahill of Wells Fargo.
Speaker Change: Thank you.
Hilton Howell: First Hilton was wondering if you could just touch a little more on some of your comments around the M&A opportunity certainly looks like it could be an exciting next few years with what the FCC is doing you mentioned swaps as something that might be attractive to gray how do we think about those and what the financial benefits of those could be and you know I know assembly.
Hilton Howell: Is it close to home figuratively and literally you do have a large acreage there that you spoke about would you ever consider monetizing some of that to give you more dry powder for station M&A since you're at a point or a little higher leverage now and then just a second question on on political you know some of them.
Things stayed the same this last political cycle some of the things change as you look to 2026, and maybe have a little bigger fight against connected T V to retain your share of political dollars. What can you kind of do this year and next year to be ready to maintain that share. Thank you.
Hilton Howell: Well I think we're gonna have to pass these questions around to each other.
Speaker Change: Make sure I have I understand the question about you know.
Speaker Change: What we're doing at Assembly, Stephen what were you asking.
Speaker Change: Yeah, but if you if you would just monetize any of your unused acreage totally give yourself some more dry powder first nation.
Speaker Change: I mean, we don't foreclose any profitable an appropriate transaction alright, so we're willing to listen to all kinds of folks.
Speaker Change: So the answer is yes does that mean, we're going to do that.
Speaker Change: But you know I'm not going to foreclose any kind of opportunity it would depend on the individual sort of transaction. We have considered a variety of things all of which add great value to our company into our shareholders.
Speaker Change: I really I encourage you Stephen and actually everybody on this call and we really should probably one day have an investor meeting at our studios because I think when you actually physically see them I think youre going to have a very positive view of what we've created and the value that it has for this company and will in the future.
Speaker Change: But a core business for us.
Speaker Change: We got 80 acres and we're gonna be we may strike lots of deals in lots of different.
Speaker Change: Financially beneficial.
Speaker Change: Structures as we see what we can do with the remaining 80 acres now with regard to political and connected TV.
Sandy: Sandy is that.
Speaker Change: That's all the time.
Speaker Change: And I see that you know, we're fortunate that you know and with the strength of our stations we have not only strong local reach on the linear broadcast side, but because of that also on all of our platforms. We had strong digital audience. That's when we get strong connections in that entity that we have a as Pat said a dedicated team now actively working.
Speaker Change: To focusing on ways to better leverage our strong digital audience is going forward. We know that that's going to continue and we have a lot of opportunity in 'twenty six we have a lot of political ups any and all of our markets. So that is a high focus for us and we expect that the growth certainly for gray.
Speaker Change: Well and then you ask a question about M&A and anyone in our room guys can opine as you see fit but Stephen I mean, theres all kinds of opportunities swaps, we will be looking at.
Speaker Change: Particularly if the FCC and the department of Justice allows them because you know, it's hard, particularly in smaller markets to make a to make a decent buck with the expenses of having a significant local news one of the great benefits to our company that we have been articulating to the public.
Speaker Change: That's literally forever is that we have only bought number one news stations throughout our entire M&A efforts and so we have a handful that are not at the levels that we want them to be with fixed that I mean, we we have done that in our news content is there and it's focused.
Speaker Change: It's consistent and it's focused on local issues and local news, we don't do opinion journalism and something I do want to say with regards to this I'm really proud of what John Ducker I want to call them out because you know the new the White house has been call. It a gray television in our boy John Decker.
Speaker Change: Almost every day in the White house in conferences, and Ive been awfully proud of that but adding duopolies in smaller markets, which is something that has been a nascent and at bigger markets candidly that is been anathema to regulations in the past is something that is going to be very helpful to maintaining a strong <unk>.
Speaker Change: Local news content.
Speaker Change: And the government has gotta get with it so I think the M&A World will began with swaps, but who knows if the world's changed dramatically there could be broad or combinations of gray is interested in all of the above.
Speaker Change: Thank you.
Speaker Change: Yeah.
Speaker Change: Oh, right and so far we only have one more question in queue. So I'll just remind everyone. You can press star one on your telephone keypad. If you would like to get a question and but so far our final question is going to come from Alan Gould of loop capital.
Hi, Thank you. Thanks for taking the question and thanks for the Investor deck earlier today or any investor deck. It shows the leverage goal of four times, you're about five and a half times today, you usually go up in political and it usually increases in political years, how long until we get to four times and then a second question.
Speaker Change: I guess for Kevin.
Speaker Change: Your Washington, Slide talking about deregulation, so besides M&A and station swaps what other deregulation opportunities are there I know specifically you also mentioned there the network affiliate relationships I'm sure I assume that's what the B M. B P D, but what else will help them with deregulation.
Speaker Change: Yeah.
Speaker Change: Oh go first because it's easy.
Speaker Change: Our big goes from Washington, or.
Hilton Howell: As Hilton mentioned, a relaxing the wandoo market rule adopted in 1940.
Hilton Howell: Secondly, yes, you see showing some interest in the network affiliate relationship primarily around.
Hilton Howell: The networks and complete control of our distribution.
Hilton Howell: The virtual Mvpds, which are a sizable part of the.
Hilton Howell: Distribution industry at this point.
Hilton Howell: And then third a next Gen T V is a huge and.
Hilton Howell: An important.
Hilton Howell: The opportunity for this industry.
Hilton Howell: We've.
Hilton Howell: We've gotten some Midland progress with you as you see the last couple of years, we really need them to step forward and removed.
Hilton Howell: Some of the shackles on our business regarding nexgen, so there's a lot that can happen there.
Hilton Howell: Uh huh.
Hilton Howell: So those would be the those are the big three pillars, a Washington regulation.
Hilton Howell: Yeah, no and on your other question about getting to the four times its going to take it's going to take a few years to get there obviously the heavy cash flow years are the political years.
Hilton Howell: Even in off years, we are cash flow positive and so it's just not to the same extent and so you know it'll take it'll take us a few years to get there but.
Hilton Howell: I think there's clear line of sight after what we've done what we did in 'twenty four.
Hilton Howell: And.
Hilton Howell: Now capturing a little bit of a discount accelerated at and fourth quarter accelerated some of the principal reduction, which then drives lower interest expense and starts.
Hilton Howell: It starts to starts to get the cash flow the discretionary free cash flow to a spot where we have.
Hilton Howell: More ability to reduce the principal further.
Hilton Howell: Just let me tell you a little bit about history. When we closed on the right countries a transaction one of the best deals in the history of broadcast.
Hilton Howell: We got up to a five star and within 18 months, we got down to a three five add but that was at a time when interest rates were very much lower than what we have had in the past over the last couple of years. Since we finished the acquisition of Meredith and Quincy Hussein during the by the administration.
Hilton Howell: Very rapid increase in interest rates and its been happy that the fed happy for me at least that the fed has seen fit to reduce interest rates are of course, we're at the beginning of 'twenty through 'twenty 'twenty four I know they kind of paused at the beginning of 2025, but I think that we are in an interest rate diminishing.
Hilton Howell: Area prospectively, and that's going to help us tremendously because this is a free cash flow generating business.
Hilton Howell: Particularly is a robust free cash flow generator. So we look forward to getting it delivered on a lot of and.
Hilton Howell: And a lot of areas.
Hilton Howell: Yeah.
Hilton Howell: Okay. Thank you.
Hilton Howell: Yeah.
Hilton Howell: Okay.
Hilton Howell: Oh, right and with that I will now turn the program back over to Mr. Hilton Howell for closing remarks.
Hilton Howell: Thank you so much operator and everyone on this call listen everybody Gray is an exceptional company with an exciting future. There will continue to evolve and invest to meet the opportunities and are ever changing and really quite exciting industry, our revenues and cash flow. Our solid we have walked the talk on reducing our debt our expenses.
Have slowed significantly our investment in Nextgen TV and assembly Atlanta are poised to deliver we are reaching new audiences with local sports and we expect that the government will finally leveled the playing field for companies like Gray.
Hilton Howell: These are the main reasons why I personally remain weak and excited by the long term prospects. We thank everyone for joining the call today operator at this time, we ask that you hope that you closed a lot and thank you all for being with us.
Hilton Howell: Yeah.
Speaker Change: And with that ladies and gentlemen that does conclude your call. You may now disconnect your lines and thank you again for joining us today.