Q4 2024 The E.W. Scripps Co Earnings Call
Good day and thank you for standing by. Welcome to the fourth quarter of 2024 E. W. Scripps Company earnings conference call. At this time, all participants are in a listen-only mode. After the speakers presentation, there will be a question and answer session. To ask a question during the session, you need to press star 1-1 on your telephone. You will then hear an automated message devising your hand is raised.
A reminder, that our conference call and webcast include forward looking statements based on management's current outlook and actual results may differ materially factors that may cause them to differ are outlined in our SEC filings, we do not intend to update any forward looking statements we make today.
On this call will be a discussion of certain non-GAAP financial measures that are provided as supplements to assist management and the public in their analysis and evaluation of the company. These metrics are not formulated in accordance with GAAP and are not meant to replace GAAP financial measures and may differ from other companies uses or formulations included in our earnings release are the reconciliations of non-GAAP.
Financial measures to the GAAP measures reported in our financial statements.
We'll hear this morning from Scripps President and CEO, Adam Simpson, and then Chief Financial Officer, Jason Collins, Here's Adam.
Good morning, everybody and thanks for joining us I'll start this morning by making sure you saw the information we put out yesterday in an 8-K detailing the binding commitments, we have to refinance our revolving credit facility and our 2026 and 2028 term legs I wanted to thank you for your patience a few weeks ago, when we opted to delay releasing earnings to wrap up this one.
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Jason will be along shortly to discuss the details.
Speaker Change: This morning, we're reporting terrific fourth quarter and full year 2024 results a strong move down in year end leverage and really meaningful progress on performance improvement for the Scripps networks that we first told you about last year.
All of this progress comes as a result of the company's focus on transformation.
Speaker Change: But before we discuss scripts as performance I wanted to start high level with an assessment of how the changes in Washington spell opportunity for our industry for Scripps and for our investors.
Speaker Change: The appointment of Brendan Kerr to serve as chairman of the Federal Communications Commission signals a significant shift in the federal government's attitude toward local broadcast TV.
Speaker Change: Car has been a vocal advocate for reducing regulatory constraints and he has expressed intent to revisit and potentially relax existing ownership limits for local television stations.
This free market policy shift could present, new opportunities for us and our peers to strengthen the operating performance of our business through end market and company consolidation.
Speaker Change: I've changes long overdue.
The current FCC ownership rules restricting the number of stations a single company can own both within our market and nationwide run counter to the original aim at the rules to preserve competition and a wide range of viewpoints.
Speaker Change: In fact, given how much fragmentation has occurred in the journalism and media landscape. Following the digital Revolution. The current ownership restrictions are creating local broadcast group economics that threatened to silence. The very voices they were designed to protect.
Speaker Change: When these rules were created back before World War two our local broadcast television station competed with a few other stations a newspaper or two and maybe a few radio stations for news audiences and advertisers that wanted to reach them today.
Speaker Change: Today, a plethora of voices comes through digital platforms, social media streaming services and a wide range of news outlets that fall across the political spectrum.
Speaker Change: America does not lack access to information and opinion.
Speaker Change: And you have the rules that govern our business have not kept up putting our industry and local journalism itself at an unfair disadvantage.
Speaker Change: Easing the federal ownership restrictions would finally allow broadcasters to compete in this modern media ecosystem.
Speaker Change: Economies of scale, we will increase our ability to invest in local content and better serve our communities with objective locally created news.
Speaker Change: We will continue to be there for them during severe weather natural disasters and all of the other times of crisis and joy connecting our communities two important local information.
Speaker Change: And we will be the platform Americans can continue to rely on to bring people together around live sports for free because these are the things that matter most to people.
Speaker Change: At Scripps if the government sees fit to modernize the rules you should expect us to lean into the opportunity in ways that promise to improve our operating profile deepen our connection to the communities, we serve and most definitely unlock greater value for shareholders.
Speaker Change: Now I would like to turn to the plan were already executing at Scripps to reduce our debt improve operating performance and set the stage for company growth.
Speaker Change: First we're very pleased this week to be announcing a significant round of debt refinancing.
Speaker Change: Jason will give you the details in a moment and I'd like to reinforce that successfully managing our debt structure and Paydown is one important aspect of the plan we are executing well.
Speaker Change: We were able to bring down our leverage ratio to four eight times by the end of the year, that's nearly a full turn below the end of 2023.
Speaker Change: In addition, we continued to make strong progress toward improving the company's financial performance.
Speaker Change: To this end for example, the company has already taken the necessary steps to improve the Scripps networks Division margin by 400 to 600 basis points. This year.
Speaker Change: Last year, we significantly reduced scripts news as operating costs, and we've reduced head count and expenses elsewhere in the division we.
Speaker Change: We reported a fourth quarter margin of 28% and it would have been even better if we hadn't had a little noise from a one time charge.
Speaker Change: We are on track to continue networks margin improvement in 2025, something you should see implied in our first quarter guide.
Speaker Change: And the local media Division, we achieved a record political advertising revenue almost 30% higher than our 2020 presidential election year revenue <unk>.
Speaker Change: Remarkably more than 80% of these dollars came from only six states to me this reinforces our value in reaching local voters in a highly partisan political climate.
Speaker Change: Looking ahead to this year, we are totally focused on continuing the transformation of our business leaning into the connection we make between audiences and advertisers across platforms locally and nationally around our news and programming and.
Speaker Change: And nowhere is that connection more potent than through script sports.
Speaker Change: Through our own acquired sports rights or the programming, we deliver locally with our network partners linear TV dominates with live sports.
Speaker Change: In the Scripps networks Division last year, we told you that we closed a successful upfront selling out more than 75% of our sports inventory, allowing scripts to buck the industry trend and beat peer performance, thanks to increases in demand and volume.
Speaker Change: That laid the foundation for 2025 and now as we head into the beginning of the NWS L and WNBA seasons.
Speaker Change: <unk> sports inventory is commanding advertising rates that are more than two times its non sports inventory.
Speaker Change: Scripps has undoubtedly delivering on its promises we are greatly improve our improving operating performance as well as our balance sheet decreasing our debt and extending the maturity profile and positioning ourselves to capitalize on the opportunities of deregulation our.
Speaker Change: Our commitment to this plan, we are executing has never been stronger.
Jason Collins: Now here is Jason.
Jason Collins: Good morning, everyone and thank you for joining us I'd like to start my remarks today by addressing the major milestone reached this week and our debt refinancing efforts, we announced yesterday that we've executed transaction support agreement with the majority of our 2026 and our 2028 term loan holders.
This cares for our nearest term maturity, while also extending our portion of the 2028 term loan at favorable economics.
Jason Collins: We also entered into a commitment letter with accounts receivable securitization providers for new AR securitization facility.
Jason Collins: Here are a few of the details the refinancing we announced yesterday includes a two year extension on our 2026 term loan and a one year extension on a portion of our 2028 term loan.
Jason Collins: And it includes an AAR securitization that will be used to pay down a portion of our 2026 term loan at a very favorable rate.
Jason Collins: Despite the current elevated rate environment I am pleased to share that these transactions are only increasing our blended cost of debt by less than 1%.
Jason Collins: In addition, we have come to an agreement with a revolver banks to extend a portion of our revolving credit facility through mid 2027. Once the transaction closes. This allows us to maintain the liquidity needed for our business operations.
With the completion of this work in the coming weeks scripts will have retired or extended the maturity of up to one $5 billion of debt.
Jason Collins: We've also been in discussions with an AD hoc group of our holders of our other near term maturities.
Jason Collins: In addition, we continued to prioritize using free cash flow to reduce the amount of our debt.
Jason Collins: This good news follows our strong finish to 2024.
Jason Collins: During the year, we set another political advertising record, we completed affiliation agreements with NBC and CBS, we strategically reduced expenses, we closed on $20 million of property sales and reached an agreement for another $50 million.
Jason Collins: We paid down nearly $350 million in debt and we significantly reduced our leverage ratio.
Jason Collins: In fact, the revenue from political advertising, our expense management and the debt reduction drove our leverage ratio down by nearly a full turn on a year over year basis to four eight times.
Jason Collins: Just a reminder, we ended Q2 at $6 <unk> in the third quarter at five one times. So we were pleased to end 2024 with such a meaningful improvement in our leverage ratio as we move back down towards the company's historically lower range.
Jason Collins: Now I'd like to go through our local media and Scripps networks divisions highlights for the fourth quarter and Q1 guidance and then share full year 2025 guidance on a few items.
Jason Collins: Let's begin our look back with our local media Division results.
Jason Collins: In the fourth quarter local media Division revenue was up a whopping, 34% from the year ago period.
Jason Collins: That compares favorably to our guide of up in the low to mid 30% range. We received a record amount of fourth quarter political advertising revenue $174 million.
Jason Collins: Our full year 2020 for political advertising revenue came in at $343 million.
Jason Collins: The record amount of political advertising in many of our markets did cause the displacement of core advertising revenue.
Jason Collins: Core advertising for the fourth quarter came in about 11% below Q4 2023 at $147 million.
Jason Collins: Local distribution revenue was down 5% year over year as we had no pay TV contract renewals in the quarter.
Jason Collins: For the full year distribution revenue was up about 2% in line with our expectations. Our total subscriber base declined about 5% during that period and was about flat from the third quarter of 2024.
Jason Collins: Local media expenses increased five 7% from the prior year quarter in line with our guidance of up mid single digits due to the expected cost of new local sports rights as well as modest step ups in existing big four network contracts.
Local media segment profit was nearly $200 million compared to $86 million in Q4 of 2023.
Jason Collins: For the first quarter, we expect local media division revenue to be down in the high single digit range with core revenue down in the low to mid single digit range. We expect Q1 local media expenses to be up in the low single digit percent range.
Jason Collins: Now, let's turn to the Scripps networks Division fourth quarter results and guidance for the first quarter of 2025.
Jason Collins: In the fourth quarter, Scripps networks revenue was $216 million down 6% from the year ago quarter and consistent with our guidance.
Jason Collins: Connected TV revenue was up 16% in the fourth quarter after backing out the programmatic advertising product, we shut down starting in Q1, we will have mostly lap dot com.
Jason Collins: We continue to feel the impact of streaming services growing advertising inventory, but the growth in the fourth quarter at a time that we're beginning to see that pressure moderate and we've seen even better trends as we moved into the first quarter.
Speaker Change: In Q4, Scripps networks division expenses decreased by more than 6% due to tight cost controls and the reduction of Scripps news operations actually we have guided for Scripps networks to be down in the high single digits and we would have met that guidance. If it were not for a nonrecurring charge we took in the quarter.
Speaker Change: As a reminder, we expect the networks division margins to improve by at least 400 to 600 basis points in 2025 and for the first quarter, we're trending towards the high end of that range.
Speaker Change: Network segment profit for Q4 was $61 million.
Speaker Change: For the first quarter, we expect Scripps networks division revenue to be down in the mid single digit percent range and for networks expenses to be down in the mid teens range due to aggressive expense management across a variety of functions in the segment.
Speaker Change: Turning to the segment labeled other in the fourth quarter, we reported a loss of $8 $3 million.
Speaker Change: Shared services and corporate expenses for Q4 were $24 7 million.
Speaker Change: For the first quarter, we expect that line to be about $22 million.
Speaker Change: For the fourth quarter, the income attributable to shareholders of Scripps was $80 million or <unk> 92 per share as a reminder, as a reminder, that the preferred stock dividend has a negative impact on earnings per share even when we don't pay it.
Speaker Change: This quarter it reduced EPS by <unk> 17.
Speaker Change: In addition, fourth quarter results included a $19 million gain from the sale of transmission tower sites in San Diego and $29 9 million in restructuring charges, primarily attributable to Scripps news reductions and an investment write off.
Speaker Change: The combined impact of those items decrease the income attributable to shareholders by <unk> <unk> per share.
Speaker Change: In terms of our real estate sales. We have told you to expect about $60 million in transactions. This winter and we now anticipate closing a little over $70 million, we've completed a $20 million sale of transmission towers and reached an agreement on the $40 million sale of our TV station building in West Palm Beach will be moving our <unk> station operations to a leased facility.
Speaker Change: And we have two more transactions pending.
Speaker Change: At December 31, cash and cash equivalents totaled $24 million.
Speaker Change: We paid down $330 million on our revolving credit facility, leaving it with zero balance by year end.
Speaker Change: Our total debt at quarter end was $2 6 billion.
Speaker Change: I'll wrap things up now with guidance on our Q4 your items for.
Speaker Change: For 2025, we expect to pay cash interest of between 175 and $185 million cash taxes of $25 million to $30 million capital expenditures of $55 million to $60 million and depreciation and amortization of $150 million to $160 million. We have no required pension contributions we are executing in.
Speaker Change: Aggressive plan for both debt Paydown and leverage reduction and we've made significant progress on the execution of that plan.
Operator, we're now ready for questions.
Speaker Change: Thank you ladies and gentlemen, if you have a question or a comment at this time. Please press star one on your telephone. If your question has been answered you assumed with yourself from the queue. Please press star one again, we will pause for a moment, while we compile the Q&A roster.
Dan <unk>: Our first question comes from Dan <unk> with the benchmark Company. Your line is open.
Yes. Thank you good morning, everybody first congrats guys on the refi.
Dan <unk>: Obviously good business.
Speaker Change: Adam just on your on your FCC commentary, obviously this has been highly topical for the space.
Dan <unk>: A few things we saw.
Dan <unk>: <unk> announced that David Scott and a waiver that should have been approved probably by the last FCC, but hasnt been approved in five years for two big fours in a market is there anything that you guys can do without additional de Reg that would help the profile and if there is the Reg how do you guys view.
Dan <unk>: Cells from.
Speaker Change: From our seller buyer perspective, that's the first question that I have a follow up thank you.
Dan <unk>: Thanks, Dan.
Dan <unk>: So I think in the prepared remarks, I made it pretty clear that we believe greater scale nationally and market is necessary for the assets to perform.
Dan <unk>: Their best for shareholders and for us to be able to continue in service to the communities where we operate.
Dan <unk>: And I expect we will do everything in our power to take advantage of this moment.
Dan <unk>: We are certainly engaged in discussions around opportunities to optimize our portfolio to improve the performance of our local stations opportunities we think.
Dan <unk>: We'll be able to take as a result of the change in attitude at the FCC I am not sure there has to be a full change in regulations as you saw earlier or last night the announcement of the <unk>.
Dan <unk>: Waiver I think is one way youre going to start to see things break. This is absolutely critical for our ability to continue to invest in local journalism and in localism itself, including live sports.
Dan <unk>: We're committing we're committed to work.
Dan <unk>: And any way necessary to unlock and maximize.
Dan <unk>: Shareholder value as to whether we're.
Dan <unk>: Buyer or a seller I mean honestly I think we're very very focused on looking at all opportunities I don't think we have the balance sheet to be a buyer certainly and we've told you our highest priority is in deleveraging and paying down debt, but I do expect us to take full advantage of the opportunities to swap and.
Dan <unk>: Potentially even to sell out of non strategic markets. If the opportunity presents itself and it is in the best interest of shareholders.
Speaker Change: Perfect and then maybe for you or Jason I guess just on distribution this year.
Speaker Change: Just to remind us how we should be thinking about it grows and then on the net side. Obviously, we've heard some improvement in sub trends you guys. Just also did NBC and CBS. So how should we be thinking about net for the next.
Speaker Change: 12, 36 months, however, you want to couch it. Thank you.
Speaker Change: Yes.
Have.
Speaker Change: About mid 20% of our subscriber base up for renewal this year and frankly, there's a lot of negotiating still needs to happen. So we're not giving any kind of full year guide at this time.
Speaker Change: Since none of those renewals are resetting in Q1.
Speaker Change: Specific to Q1, I would say since we have nothing reset in Q1, you'll see a fairly similar trend to what we saw in Q4 kind of down mid single digits, driven by sub churn without any meaningful contract step ups, but I think we'll probably have more to say about that.
Speaker Change: In future earnings calls once we've kind of gotten past those negotiations.
Speaker Change: Any color just on views on sub trends or on the renewals on the brokerage side.
Speaker Change: Yes, so I can speak in terms of the sub trend, yes, I think from a sub trend perspective, what we've seen is pretty consistent over the last couple of years down mid single digits that is what we continue to assume in our forward looking planning.
Speaker Change: We are.
Speaker Change: Optimistic about some of the things we've seen for example, with charter and some of the sub term improvements they've shown in recent quarters as a result of sort of their great re bundling of streaming services with with traditional pay TV services and <unk>.
Speaker Change: Hopeful that that actually yields us upside as we move forward, but to be conservative we kind of bake a consistent down mid single digits into our run rate, yes, Dan It's Adam on the network affiliation side.
Dan <unk>: As you referenced we did a couple of deals and I would say I'm in agreement with my colleagues.
Dan <unk>: When I say that the network affiliation renewals has to be structured in a way going forward that acknowledges the changes in the pay TV ecosystem and the networks, even strategies to build DTC products and I would expect these affiliate fees to be headed down and not up.
Dan <unk>: Perfect. Thanks, so much with you and congrats again on the refi. Thanks, Dan Thanks, Dan one room for a next questions.
Dan <unk>: Okay.
Speaker Change: Our next question comes from Michael Kaplinsky with Noble capital markets. Your line is open.
Speaker Change: Michael Your line is open.
Michael Kaplinsky: Yes, I wanted to also congratulate you on your.
Michael Kaplinsky: Youre, a great fourth quarter and also your debt pare down through 2024.
Michael Kaplinsky: That's very very strong I appreciate that.
Michael Kaplinsky: Couple of questions here I was wondering if you can just kind of give us a little bit more color on core.
<unk> what are what is driving core typically when you have such strong political advertising core tends to perform better than the off election years. Just wondering obviously some macro economic turns here, but I was wondering if you can kind of give us some color on what are the categories that are kind of lagging at this point and give us some color on your.
Thoughts on core advertising as we progress through 2025.
Michael Kaplinsky: Yes, so I can take that so.
Michael Kaplinsky: Q1 core has certainly been a little weak thus far we guided to core being down kind of low to mid single digits. There's a lot of uncertainty right now.
Michael Kaplinsky: About the economy and the potential impacts on tariffs and what those may have on key categories. For example, automotive and just the overall ongoing implications from an elevated interest rate and inflation environment. All of this what we're seeing is leading to consumer hesitation and delayed spending decisions from a category perspective, I would say youre seeing thats, most heavily impact automotive and.
Michael Kaplinsky: Retail.
Michael Kaplinsky: Services and home improvement are trending down in Q1, as well, but not to the same magnitude and so we're obviously very focused on keeping a close eye on how the economy reacts as we start to move into Q.
Michael Kaplinsky: Q2, and rapidly working expenses right now to help offset some of that core weakness that we as well as you heard at our peer calls as well are experiencing in Q1 your comment around political displacement I mean, I think that there is an expectation in the back half of the year you do get a bounce back from from political displacement and the crowd out that.
Michael Kaplinsky: Happened given the fact that we had such a record significant record political year last year.
Michael Kaplinsky: But I think there is a question mark that remains in terms of how much of that is offset if there is continued.
Michael Kaplinsky: Uncertainty economic uncertainty in the marketplace.
Speaker Change: Thanks for that color and then another quick question here can you provide an update and color on your initiatives to use your broadcast spectrum under the edge being wireless and <unk>.
Speaker Change: Just wondering if you expect meaningful revenues from this venture where and when that might start kicking in.
Speaker Change: Excuse me if you could talk a little bit about if there are any associated startup costs associated with it and I think in your press release, you noted that this needs to be ubiquitous across the entire U S footprint to be rolled out and I was wondering when do you expect to have 100% coverage of the U S.
Mike: Thanks, Mike.
Mike: So, yes, youre referencing edge beam, we joined with Nexstar Sinclair and greater launch the joint venture called as being wireless and we announced that I think at the end of the end of fourth quarter. The JV brings together for the most powerful broadcasters into one platform to your point of ubiquity that platform reaches 90%, 97% of U S. TV.
Mike: <unk>.
Mike: And for the first time really presents a true nationwide footprint, which is critical for the development of the data casting marketplace and for the nation's transitioned to <unk>.
Speaker Change: <unk> sort of comes in an ideal time from a regulatory perspective too as the chairman has also talked openly about facilitating the industry's complete switchover from <unk> to <unk>, which is a very important and necessary step chairman car has recognized that broadcasters through a platform platform like edge beam consols myriad of problems for the nation from.
Speaker Change: Enhanced GPS for the benefit of National Security, which he had just spoken about I think last week or the week before to even efficient CDN solutions for streaming platform is taking off some of the bandwidth crunch that we're starting to see as a result of so much. So much video being sent over screaming. All of this makes me really bullish on the opportunity for us.
We're already starting to get traction with companies that have historically been the hold into expensive five G or a private <unk> networks, because our service offers up a much more efficient alternative and one that works in conjunction with <unk> I don't think its going to be too long before we're sharing more details on revenue and how the market.
Speaker Change: <unk> is developing I wouldn't.
Speaker Change: <unk> revenue in the models for this year, but I do believe it's not going to be long before we're able to share details on this as a as a material revenue line.
Speaker Change: And obviously.
Speaker Change: Obviously, you identified like over $7 billion and a total addressable market.
What type of share do you think you anticipate getting in that total addressable market. If you can kind of give us some color on expectations of revenue.
Yes, so the beauty the beauty of the way. This has been situated is that edge beams sit as a middle layer and then.
Speaker Change: Those come.
Speaker Change: Companies that are owners of edge beam ourselves included along with other affiliates actually create value at the station level or at the at the broadcast group level within commercial agreements back from edge beam I think it's a little early right now to determine that.
Or just in the middle of recruiting the CEO.
Speaker Change: For edge beam, but I can tell you we've already because each of these parties was already engaged separately and work to catalyze the marketplace. We're already seeing some traction with folks that are looking to leverage our spectrum. So like I said I don't think its going to be much longer before we're able to make a statement about.
Speaker Change: Actually seeing some revenue flow back to these companies I don't think it's going to be modeled model material revenue in 2025, but depending on the timeline that we work on with the government on that trends transition. This is beginning to.
Speaker Change: Be something I think that represents significant value for <unk> four.
Speaker Change: Investors in years to come.
Speaker Change: Terrific. Good luck with that that's all I have thank you. Thanks.
Michael Kaplinsky: Thanks, Mike.
Speaker Change: One moment for our next question.
Michael Kaplinsky: Yes.
Steven: Our next question comes from Steven <unk> with Wells Fargo. Your line is open.
Steven <unk>: Thank you first just a couple of advertising question. So on networks could you just elaborate a little more on the trends Youre seeing I think you said, they're improving as you've gone through the quarter recently some of the conference commentary.
Steven <unk>: <unk> recently has been a little more negative on the macro so I would just love to.
Steven <unk>: To hear what Youre seeing from an advertiser's standpoint, and their town and Relatedly as we think about local sports is there a good way to think about local sports contribution to core revenue growth in 2025, and then I have a couple of follow ups on the debt.
Steven <unk>: Sure.
Steven <unk>: I can start so specific to your question on networks.
Steven <unk>: And the AD marketplace. It it's been a bit of a mixed bag on network as we move through Q1, Yeah, we talked last year coming out of the Upfronts on the strong results, we have but the majority of that was really tied to.
Steven <unk>: Two sports and based on sort of the timing of the WNBA and <unk> seasons, we won't really start seeing the full benefit of that until Q2 and Q3 of this year in Q4 of last year. When we kind of look back at the results that we posted we saw we definitely saw pricing pressure in both general market and direct response and while that has improved a little in Q1, it still is being negatively impacted.
Steven <unk>: Acted by the uncertainty in the economy right now I think the positive trends you referred to there were really on the CTV front, where.
Steven <unk>: We saw revenue growth sort of ramp back up in Q4.
Steven <unk>: I think we said 16% growth when you kind of adjust out are the programmatic product, we sunset and that that is accelerating in Q1, and I would expect from a CPG perspective to see growth of more than 30% in Q1. So I think thats sort of the mixed bag, Dr and general market is still being impacted by the current state of the economy, but connected TV.
Steven <unk>: Beginning to rebound, yes, one thing Steve that I would just point out when you sort of generalize based on.
Steven <unk>: A peer company performance.
Steven <unk>: Of our peers are constrained to reaching consumers through cable.
Steven <unk>: And obviously, we all know where thats going the fact is that <unk> distribution.
Steven <unk>: On pay TV satellite cable Otas and connected TV makes us a little bit unique.
Steven <unk>: In the marketplace in fact, we're hearing more and more from general market advertisers as Theyre planning that that ubiquity of reach gives us an advantage in taking share in the market that and our strategy around women's sports I think will continue to define us a little bit away from our peer set in.
Steven <unk>: In the market.
Speaker Change: Do you want to talk about local sports contribution core yes.
Speaker Change: Yes, I mean, what we said last year was that that local sports was driving a.
Speaker Change: Yes, 3% to 4% growth in our overall core obviously, we're lapping past some of that we do have one new franchise that will be contributing some growth this year.
Would you be the Florida Panthers.
Speaker Change: But.
Speaker Change: And so we do expect some growth.
Speaker Change: Probably in the low single digit range.
Speaker Change: But as I alluded to earlier, we expect some growth in our sports assets, we expect a bounce back from political displacement, but theres a big question Mark out there given everything that's going on in the discussion on tariffs and what that could to certain categories on how much that offsets that.
Speaker Change: The two areas, where we do expect the growth.
Jason Collins: Thanks for that color and then Jason just on the debt. So on the accounts receivable securitization facility is there anything we need to think about to model that in free cash flow and as the cost of that included in your cash interest guide for the year or is that outs.
Speaker Change: Outside of that.
Speaker Change: And then also just so you have done a great job now pushing out maturities I think the next one is the notes due in 2007.
Speaker Change: Not mistaken the revolver also comes due in 27, so is the thinking that between free cash flow and divestitures, you're confident you'll have enough cash.
Speaker Change: To pay down the notes without the revolver and Thats why it works to have the revolver currently just through 'twenty seven so I'm just wondering if you can.
Speaker Change: About all that correctly. Thank you.
Speaker Change: Yes, so I'll start with the <unk> securitization.
Speaker Change: The air Securitizations.
Speaker Change: Specific to when Youre asking your free cash flow you need to do differently the interests tied to that and the rate on that is very advantageous for us. It is included within our interest expense that will that youll see flow through the interest expense guide, we gave of $175 million to $185 million.
Speaker Change: Once we close that.
Speaker Change: The air Securitizations does get excluded from R. R.
Speaker Change: Our.
Speaker Change: Leverage metrics and we'll obviously provide some update in terms of once we close the transaction on sort of forward looking leverage estimates.
Speaker Change: Remind me what your next question was after the AAR Securitizations.
Speaker Change: The revolver 27 mentioned timing, how you're thinking about timing.
Speaker Change: Timing.
Speaker Change: We do have the rollout coming due in 2007, we also over our 2027 unsecured bonds.
Speaker Change: What I can say specific to <unk>.
Speaker Change: To any near term maturities is first of all I will just went back and we're really happy and pleased with the results of transaction that we announced yesterday.
Speaker Change: Now look forward to closing that in the coming weeks.
Speaker Change: We can say we have been in discussions with an AD hoc group of holders on some of our other near term maturities.
Speaker Change: I also do believe that we will generate.
Meaningful cash flow this year and next year that will allow us to manage down the revolver balance as well.
Speaker Change: Great. Thank you.
Steve: Thanks, Steve.
Speaker Change: Remember for our next question.
Speaker Change: Yeah.
Speaker Change: Yes.
Sean <unk>: Our next question comes from Sean <unk> with Barclays. Your line is open.
Sean: Thanks for taking my question.
Sean: Just a follow up on that question I know you guys had previously highlighted a more comprehensive refi the 'twenty six 'twenty seven.
Sean: Obviously, you guys commented that.
Sean: The 27th we're left out of the refinancing could you give us a little bit more color.
Sean: As Q.
Sean: Why those were.
Sean: Just out of the refinancing and how youre thinking about it going forward given the terms of the TSA announced yesterday.
Sean: Quite a few more limitations there.
Sean: Yes, so I can't really provide any specifics on the strategy or or <unk>.
Sean: Tactics there.
Sean: Just point back to the fact that we've had discussions with the AD hoc or for other holders in that we are focused and continue to be focused on addressing all of our near term maturities.
Sean: I would probably at this point can't say anything beyond that.
Sean: Okay. Thank you and then maybe switching gears.
Speaker Change: Yeah, how are you guys thinking about the WNBA sports rights renewal.
Sean: Coming up later this year it seems like the women's sports.
Speaker Change: A part of your strategy.
Speaker Change: Yeah.
Speaker Change: Any color on conversations there would be helpful. Thank you, yes sure. Thanks for the question. It's Adam we do continue to work really constructively with the team at the WNBA and the NBA both sides.
Speaker Change: Our committed to the renewal because we both see the benefits the ws significantly benefited from the reach script springs through ions distribution on Otas pay TV and fast no other network or streaming partner can offer them that exposure and I expect we'll be able to share more news on the renewal in the weeks ahead last year's season.
Speaker Change: <unk> validated the entire hypothesis, we have that American fans would have no trouble finding VW.
Speaker Change: <unk>.
Speaker Change: On ion.
Speaker Change: Women's sports has successfully brought in a younger and more diverse and affluent demographic to ion and this has resulted in advertising fees as I said in my prepared remarks that are significantly higher than our typical programming and.
Speaker Change: And an excellent.
Speaker Change: Performance.
Speaker Change: As we get closer to the tip of the season.
Speaker Change: I expect it will we'll have a lot more to share on the renewal in the weeks ahead.
Speaker Change: Okay.
Speaker Change: Thank you again, ladies and gentlemen, if you have a question or comment at this time. Please press star one on your telephone.
Speaker Change: Our next question.
Speaker Change: Okay.
Craig Huber: Our next question comes from Craig Huber with Huber Research Partners. Your line is open.
Craig Huber: Great. Thank you I just got a few questions I'll just do them one at a time if I could please can you talk a little bit further about the negotiations with your broadcast networks here.
Speaker Change: I think Adam you said you expected to dump the payments to come down here and so I'm curious if you could maybe touch on if theyre getting more variable cost.
Craig Huber: In nature.
Craig Huber: <unk> or the or the prices of your pain actually coming down on apples to apples basis I'm just wondering.
Craig Huber: Clarify that a little bit.
Craig Huber: I am not sure Craig it's in my best interest or our best interest to actually go through.
Craig Huber: Much beyond what I already said I mean at the end of the day, we along with our peers believe that the.
Speaker Change: Our relationship has become lopsided.
Craig Huber: And it needs to be corrected.
Craig Huber: And we're working I think with our network partners to ensure that we are able to continue our partnership in a way that's in the best interest of both parties.
Speaker Change: Okay. Thanks for that and my second question, Jason on the cost.
Speaker Change: Outlook here for Scripps networks down mid teens in the first quarter.
Speaker Change: Quite a sea change for the positive from your vantage point getting rid of this the news operation. There can you just help us understand can you give us some financials around the <unk>.
Speaker Change: Cost outlook for this year, how much in dollars.
Speaker Change: <unk> this year versus 24 come from getting rid of this the news partly operation versus just the core cost cutting that you're doing in total how should we think about that for the year to get to your guidance.
Speaker Change: For the year, how does it.
Speaker Change: The shutdown of the scripts needs over the air operation. It does Scripps news does continue.
Speaker Change: As the streaming brand.
Speaker Change: He is driving a $35 million savings on an annual basis, starting on one one so that is a big piece of the 400 to 600 basis point Guide we gave in terms of.
Speaker Change: Margin improvement for networks, but there are other components there as well some decisions we've made that youll see kind of rolling through the programming line tied to carriage fee agreements as well as continued focus on driving efficiency and head count as well. So all of those things combined come together through to get us to that that guide and as you've heard me say on the call.
Speaker Change: We gave out the guide back in November I think there were some questions about how do you actually achieve it as we said on the call. We're actually at this point.
Speaker Change: Expecting to hit the high end of that guide in Q1 based on where we're at right now.
Speaker Change: So Jason is the non news cost savings for this year, another roughly $35 million of savings I think you've said in the past how should we think about that.
Speaker Change: We've quantified anything besides the 400 600 basis points.
Speaker Change: Okay and $35 million for Scripps news.
Okay and then also can you just.
Speaker Change: I would like to hear a little bit can you quantify actually how auto advertising is due in the first quarter on a year over year basis.
Speaker Change: Firstly, I mean hottest networks.
Speaker Change: Auto is certainly one of the more challenged categories right now because of all of the disruption coming out.
<unk> two.
Speaker Change: Tie that potential impacts for tariffs.
Speaker Change: And and so forth and so right.
Speaker Change: Right now, it's kind of trending down.
Speaker Change: I'd say its the its down the most of any of our categories right now as I said earlier services.
Speaker Change: And home improvement are failing bearing a little bit better and so it's kind of down in kind of that low teens range.
Speaker Change: Okay. And then also you mentioned retail category was down fairly significant who said approaching that number is walden.
Speaker Change: But it's doing better than auto auto is probably the most impacted.
Speaker Change: Category right now also remind everybody that for me.
Speaker Change: Percentage perspective auto is.
Speaker Change: Our second biggest category services continues to be our largest category has been for the better part of as long as I can remember services represents about a third of our overall.
Speaker Change: Yep.
Speaker Change: Yes.
Speaker Change: Okay, and then I think you have two more here if I could the Scripps networks are there any advertising categories, there that you'd want to call out that are doing materially better.
Speaker Change: Trends last six months and maybe are there any that are doing materially worse and any significant changes there.
Speaker Change: I think what we've seen is that from a general market perspective.
Speaker Change: Consumer packaged goods and the restaurant category has been down more than some of the other categories pharmaceuticals, and retail have hung in there a little bit better than those two and from a Dr perspective I'd.
I would say consumer packaged goods and health care are the weaker categories.
Speaker Change: In the Dr space.
Speaker Change: Okay I appreciate that.
Speaker Change: The other question wanted to ask you on live sports and so you sort of think about all the theories hours you guys are adherent and live sports or are you pretty confident.
Speaker Change: Almost across the board that the EBITA youre getting off those.
Speaker Change: Those few hours fleet sports that youre showing on there is materially more profitable than what it replaced.
Speaker Change: Yes without question I mean, it's clear that live sports is a sweet spot for linear television and our move into women's sports was particularly well timed.
Speaker Change: We were ahead of the demand and that's benefited us propelling US pass the other general market or general entertainment networks versus with respect to peer performance in advertising.
Speaker Change: I think we would definitely pursue other opportunities, but only so long as it makes financial sense Craig.
Speaker Change: It can certainly be easy to get carried away with live sports rights and overpay, but I've said consistently and I think you all know that deals that we do have to be done with discipline to create value from the beginning and that's what we've done thus far and that's the only way we will do it going forward.
Very good thanks, both of you.
Speaker Change: Thanks, Greg.
Speaker Change: And I'm not showing any further questions at this time. So this does conclude today's presentation. You may all disconnect and have a wonderful day.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: Yes.