Q1 2025 Gray Media Inc Earnings Call
The Mansion According to kevin latek
Speaker Change: Good afternoon, ladies and gentlemen, and welcome to the Gray Media Q1 earnings call. If you know you'd like to ask a question, you may join the Q at any time by pressing Star One on your telephone keypad.
Speaker Change: Again, that's star one to join the question, Q. And without further ado, I will now turn the program over to Outlook Chairman and CEO Mr. Hilton Howell, Jr.
Speaker Change: Thank you, operator. Good afternoon, everyone. As operator of interest, this is Hilton Howell with Chairman and CEO of a great media.
Speaker Change: And I want to thank all of you for joining our first order 2025.
Speaker Change: Erning's called. We'd be here in Atlanta as usual are all of our executive officers. Pat LaPlatney, our president, Co-CEO, Sandy Breland, our chief operating officer, Kevin Latek, our chief legal and development officer, and last but not least, Jeff Jingdeck, our chief financial officer.
Speaker Change: and also as usual we will begin with a disclaimer that Kevin will provide. Thank you, Hilton, and good afternoon everyone.
Speaker Change: Today we file with the SEC on form 8K our earnings release and an updated
Speaker Change: That investor slides. Later today, we'll follow the SEC on a quarterly report on a form 10Q. These materials will all be available on a website which is www.grameedia.com
Speaker Change: Through the discussions and reconciliations of the company's non-GAAP financial measures to the comfortable GAAP financial measures can be found on our website.
Speaker Change: All statements and comments made by management during this conference call.
Speaker Change: Other than statements of historical fact, should we deem forward-looking statements? These forward-looking statements are subject to a number of risks and uncertainties, 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 bonds with the SEC.
Speaker Change: We undertake no obligation to update or revise any photo constituents, whether as a result of new information, future events, or otherwise.
and I turn the call back to Hilton.
Hilton Howell: Thank you, Kevin. Today we are very happy to announce that our results for the first quarter of 2025 have been much better than our guidance about revenues and expenses.
Hilton Howell: of our guidance for the poorer. Total operating expenses before depreciation and resization and gain on disposal of assets in the first quarter of 2025 and 1% below the low end of our previously announced guidance.
Hilton Howell: Net Walls was $9 million in the first quarter of 2025 compared to that income of 88 million in the first four of 2024.
Hilton Howell: Adjusted EBITDAW was 160 million in the first quarter of 2025, a decrease of 19% from the first quarter of 2024 would call that last year's first quarter included the $110 million gain.
Hilton Howell: On the sale of our interested BMI, the very strong, superbowl results across our large CBS station portfolio at our next building day during Leap Year.
Hilton Howell: Political advertising was obviously lower than the first quarter of 2024, yet first quarter 2025 political finished well above our expectations for an off-cycle of year.
Hilton Howell: In addition to these operating results, we continue to make progress in strengthening our balance sheet during the birth quarter.
Hilton Howell: During the first quarter, we continue to prove our commitment to deliver by reducing our outstanding debtiness by an additional $17 million. We finish the first quarter with a lower leverage ratio as defined in our senior credit agreement from where we began the year.
Hilton Howell: and we will continue to use our pre-cash to reduce our leverage respectively.
On March 31, 2025, we announced the extension and increase.
Hilton Howell: in the size of our account for seedable securitization facility, along with an increase in the size of our revolver.
Hilton Howell: This enhanced liquidity allows us to continue executing on our deal leveraging plan. I am particularly proud of the support that we have received from so many of our commercial banking partners and our confidence in our future.
Hilton Howell: As noted in our press release this morning, a board of directors declared the usual 8 cents per share quarterly dividend.
Hilton Howell: By now, everyone isn't aware of the new regulatory tone coming from Washington, like always, the board will consider capital allocations each quarter and a lot of opportunities to deploy capital for growth.
Hilton Howell: Operationally, we continue to enhance our local content offerings in the first quarter of 2025.
Hilton Howell: We continue to enter into new sports rights agreements to bring more local sports back to our local stations.
Hilton Howell: In just two years since announcing our innovative deal with the panic zones in Mercury, we now have our own local and regional sports deals covering nearly 80% of all of our markets.
Hilton Howell: These sports broadcasts are, of course, in addition to the professional sports provided by our network partners.
Hilton Howell: The combination of our premier local news franchises, little local sports, make our local stations even more relevant and more valuable than ever.
Hilton Howell: Our stations and our people continue to receive national recognition for their outstanding journalistic efforts.
Hilton Howell: and recently announced our poster boards across our group, WANF and Atlanta and WDUV and New Orleans.
Hilton Howell: Both received nominations for the 46th Annual News and Documentary Any Awards in Outstanding Regional News Stories, Investigative Category.
Hilton Howell: W.I.V.W. in Topeka, Kansas, won the prestigious service to America award for small market television for their campaign, hearing, singing, highlighting mental health issues.
Hilton Howell: WA and Atlanta, WA, W-A-B-E, and Louisville, and Investigate, TV, Grays, National, Investigated Unit, All Received National Headliner Awards.
Speaker Change: And lastly, our very own Sandy Breland, sitting to the right of me right here.
who was named the 2025 John F. Ponin.
Speaker Change: Distinguished Award winner by the Radio Television Digital News Association for her unwavering dedication to journalism and freedom of the press.
Speaker Change: The momentum at assembly studios also continued in the first order of 2025.
the new CBS soap opera called Beyond the Gaze.
Speaker Change: which debuted in February , has seen strong ratings and created a buzz not only on site at assembly but across our large portfolio of CBS network stations.
Speaker Change: We are real, absolutely thrilled to be hosting many of our high profile movie and streaming productions at assembly studios and are constantly working to bring more productions to our sound stages.
Speaker Change: Outside of the assembly studio gates, we're working with other companies who are actively investing their time and their money to bring a lot of other parts of our assembly Atlanta development.
Speaker Change: We expect to have more announcements about these exciting plans later in 2025 as we have said repeatedly.
Speaker Change: We have seen tremendous interest from potential development partners who could contribute their financial resource and development expertise to accelerate value creation at assembly Atlanta.
Speaker Change: We've had a very busy start in 2025 and we are excited about the expanding avenues to enhance the value of all of our businesses. At this time, I'd like to ask Pat to address our operations.
Matt: Thank you to them. On a fourth quarter call, we spoke about the cautious tone among our advertisers, especially within the automotive category.
Speaker Change: The daily developments regarding trade and tariffs have continued to foster uncertainty among advertisers and hindered our ability to forecast as we've done in recent years. Yet, despite this backdrop, we're pleased with our first quarter results.
Speaker Change: As expected, our core advertising revenue for the first quarter of 25 finished down 8% versus the first quarter of 24 and right in the middle of our guidance range.
Speaker Change: Remember, about half of our declining core, $9 million in due, $9 million bucks.
Speaker Change: is attributable to the Super Bowl airing on our 33 Fox channels in 2025.
Speaker Change: Compared to our 54 CBS affiliates in 2024. On the positive side, our Fox channels are up 50% versus the Fox Super, versus the prior Fox Super Bowl, with 9 million of core ad revenue in 2025.
Speaker Change: The category perspective automotive came in as expected down to high single digits. The second quarter auto is still tracking down high single digits as we continue to see the uncertain macroeconomic conditions impacting advertiser confidence.
Speaker Change: We think continued high interest rates also are weighing automotive demand.
Speaker Change: Other categories linked to consumer discretionary spending like restaurants and department stores were soft, while more essential categories like education and financial services perform better.
Speaker Change: From client conversations, we also believe that some categories saw a, quote, beat-the-tariff effect, including automotive.
Speaker Change: There are a few bright spots. Legal was up a couple of points and has grown to a low double-digit category for us.
Speaker Change: We have a dedicated team focused on the travel and tourism vertical, the wall of smaller category, remisely on a year-over-year basis, and continues to trend higher. Digital was again up double digits, which is encouraging.
Speaker Change: Finally, our new local direct business grew slightly in the first quarter of 2025.
Speaker Change: Given the economic uncertainty, we're very pleased that our multimedia sales teams are continuing to grow on a new advertiser base.
Speaker Change: The very bright spot in the first quarter of 25 was political ad revenue.
Speaker Change: Our guide for the first quarter of 25 was 2 to 4 million, while our actual results came in at 13 million.
Speaker Change: Most of this revenue was generated in the competitive Supreme Court race in Wisconsin, where our stations cover most of the state.
Speaker Change: We saw a meaningful spending of the panhandled Florida and the race for Matt Gaetz former congressional seat. We also benefited from a few special elections in the first quarter, and finally...
Speaker Change: We are seeing the first political ad buys now for primaries that are a year away in a one case for a general election that's 18 months away.
Hilton Howell: Kill them and touch on our sports efforts with 80% of our footprint now carrying local sports that equates the 90 of our television stations.
Speaker Change: We're very excited to watch that part of our business grow.
Speaker Change: Providing guidance to the second quarter in 25 or for the year in the current environments particularly challenging.
Speaker Change: Based on current conditions, we're guiding Second Corps Corps at Revenue to be down mid-single digits.
Speaker Change: The NCAA Final Four and Championship Game on CBS provided about a $5 million benefit in early April .
Speaker Change: The cross-categories in 2nd quarter were seeing a mixed bag with some categories like automotive and restaurants pacing lower and some pockets of strength still in legal consumer goods and entertainment.
Jeff will now address the key financial developments.
Jeff: Thank you, Pat. As Hilton mentioned earlier, reducing leverage remains our top capital allocation priority, and we made more progress in the first quarter.
Speaker Change: We finished the quarter at 2.92 times secured leverage, then 5.48 times total leverage each has defined in our senior credit agreement.
Speaker Change: We're optimistic that the more relaxed regulatory environment that has been discussed extensively the last few months could present opportunities to accelerate our de-leveraging efforts through M&A later this year.
Speaker Change: Going forward, we in the board will continue to evaluate our capital allocation priorities in light of our financial position, capital needs, and other appropriate factors each quarter.
Speaker Change: On March 31st, we increased our AR Securitization Facility Funding Availability by $100 million to a total of $400 million and extended the maturity to March 31st, 2028.
Speaker Change: Pricing on the AR facility increased slightly by 15 basis points to sofa plus 125 and at the same time we increased our revolver availability by 20 million to a total of $700 million.
Speaker Change: Together, these facilities provide access to over a billion dollars of availability, which we can use to address any challenges or opportunities that present themselves.
Speaker Change: Historically, first quarters the lowest cash generation quarter of the year, nonetheless we were able to reduce the principal amount of our outstanding indebtedness by $17 million through a combination of power repayments and open market activities.
Speaker Change: At quarter end, we had $240 million remaining on our debt repurchase authorization, and we will continue to be nimble and thoughtful as to when, where, and how we deploy our liquidity to utilize this authorization.
Speaker Change: As previously reported, starting in April of this year we believe we are now exceeding the $60 million annualized run rate of cost savings from last fall's cost containment initiatives.
Speaker Change: We expect to see the benefits of those actions as we move through 2025 and recall that there's very little, if any of that benefit reflected in our current leverage ratio calculations.
as outlined in our Senior Credit Agreement.
Speaker Change: In fact, our first quarter 2025 total operating expenses actually decreased versus first quarter of 2024 despite some normal inflationary type growth working in the opposite direction.
Speaker Change: And our Q2 guide is that expenses will remain below inflationary levels.
Speaker Change: It's the first time since the COVID slowdown that we posted lower first quarter broadcasting operating expenses than we had in the prior comparative year period.
Speaker Change: First quarter at 2025 was also the fifth consecutive quarter in which our network affiliation fees did not exceed the levels of such fees in the comparative prior year quarter.
Hilton Howell: This concludes my remarks and will not turn the call back over to Hill.
Hilton Howell: Thank you, John . In closing, our formal remarks, Gray is continuing to take necessary actions to make the investments needed to meet the challenges and seize the opportunities that are ever changing
Hilton Howell: Our strong station portfolio provides incredible value to our advertising clients. We continue to enhance our balance sheet and financial flexibility, and our team is making creative and smart investments to expand and engage with our audiences.
Hilton Howell: Perhaps most importantly, we are energized by the possibility that the government make at last allow local broadcasters to compete on a more level playing field with all of our competitors.
Hilton Howell: We thank everyone for joining the call today and so operator at this time, we ask that you open the line for questions for any of us.
Speaker Change: Absolutely. At this time, once again, ladies and gentlemen, you can press star one on your telephone keypad. If you'd like to ask a question that is star one on your telephone keypad to join the question. Thank you.
Dan Kernos: and Steve Seville, already in queue. First up, we have Dan Kurnos.
Speaker Change: Great, afternoon. Maybe we'll start Hilton, Jeff, obviously everybody's talking about.
Dan Kernos: You know, de-reg right now, I think we heard the word flexibility, about 15 times in the prepared remarks, you know...
Dan Kernos: How creative could you guys get if you saw something attractive? What are the most attractive options to you in market if that were to change getting bigger? Would you have to sell anything? Maybe just I'll open it there and then I'll ask a follow-up.
Hello. Hello.
Speaker Change: I think, actually, everyone is talking about the new poll, but I don't think they're talking about tricks or things. We made a new post on the Trump poll, Kevin.
It wasn't me, so you're lucky Thank you.
Speaker Change: We're all looking at lots of things, Dan, as is everybody else and we're looking for our smoke signals from Washington on what may be allowed and then we're getting some good white smoke signals that the environment will be much better, allow us to...
It probably injure into swaps.
Speaker Change: I'd like to create new dual-apploids or improve our strategic position, but we'll have to wait and see those. As you've talked about, those are pretty complicated. We'll need government, we need waivers or new rules to facilitate some transactions, but we're actively pursuing everything, and I think our peers are all doing the same thing.
Speaker Change: Can I ask you, Kevin? I mean, I think, you know,
Speaker Change: Perry kind of addressed this earlier with the Simonton Op-Ed piece, but you guys distinctly are in sort of the...
Speaker Change: It is a clear shot at the networks. Does it have any impact bearing on the outcome or your view as you address your affiliate negotiations?
I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry.
Speaker Change: We're not going to comment on Simon Tim's piece. We'll leave that for other folks to do. Right.
Speaker Change: We would say is that we are encouraged by comments from the chairman.
Speaker Change: from Commissioner Simon Ten and from others about the importance of local news and local broadcasters. It's a refreshing change of tone and we think it boasts well for the future.
Speaker Change: Okay, I mean, those are my questions. I'll just say one last thing, Jeff, well done on the expense side. It looks like it's pacing much better than anticipated. So kudos on that front. Thanks, guys.
Thank you.
All right, next up we have Aaron Watts
Aaron Watts: Hi, everyone. Thanks for having me on. Two questions. First, just a follow-up on industry consolidation. On the in-market opportunities that you may explore, can you remind us what type of margin list you get from creating a new duopoly or improving your presence in any given market?
Speaker Change: Yeah, Aaron, I think we've talked about this, it seems like a hundred times in the last year and our experience of creating lots of duop plays.
Speaker Change: Over the last 12 years there is no number you can put on and appreciate other folks have been able to do that. We have bought from small family publishers, we've bought from private equity.
Speaker Change: We've bought Fox affiliates and we've bought big three affiliates, we've bought large markets, we've bought small markets and the...
Speaker Change: The margin improvement varies radically based on what we are buying in what kind of market. It's the strength of our station and the strength of the other stations. So, we're not...
Speaker Change: In our experience of having a number of do-op employees across our company, and I think we have a few dozen of them, I would say that the margin improvement varies from a little to quite a lot, but we're not.
Speaker Change: We don't see a precise range of certain number of basis points because the variability is all over the place and we are not shopping in just one type of duopoly. We would like to see duopoly in many markets.
Speaker Change: and some of our best opportunities will be at both ends of this spectrum. So we're looking to...
Speaker Change: Throughout the company, deliver to these transactions, improve the company's profile for the long term, but we're not going to be focused on just trying to achieve a certain base point of an uplifting walk away.
Hilton Howell: Aaron, Mrs. Sholl, so let me add one thing to that. No matter what you do with regard to in-market consolidation, it does a couple of things.
Hilton Howell: It's inherently universally positive in terms of saving money, but it also gives us, because we are so focused on the delivery of local news, local content, local sports, you know,
Speaker Change: and so consolidation is an all and all positive for the entirety of the broadcast business and we're very excited. I think Kevin is hesitant because every deal is different and every market is different and that's one of the things we love about this business.
Speaker Change: But from our standpoint, it allows us to do our core business which is reporting local news providing now in the last two years local sports and community involvement connection.
Speaker Change: Yeah, that makes sense. Thanks for that, Hilton. And if I could ask just one more on the advertising side.
As you sit today, are you seeing actual cancellations? [inaudible]
Speaker Change: or is it more just a hesitancy to book or delaying, add buys and aside from lapping political crowd out that you had last year and the second half of this year, any reason
Speaker Change: for optimism and key core verticals that they can start to gain momentum as you roll into the back
Speaker Change: Yeah, so, Aaron's Pat on the first question, it's the latter, so we're not seeing cancellations. We are seeing some hesitancy, but you know, it's not...
Speaker Change: in any way overwhelming and in regard to the second half of the year, it looked at the services categories as we talked about, so legal health.
Speaker Change: Co-improvement. Those categories are now upwards of a third of our business and they are sort of less impacted by the tariffs.
Speaker Change: So I think that's, you know, some reason for optimism.
Speaker Change: But the reality is there's just so much of a surrogate, there's really hard to forecast.
Speaker Change: I would say if there is a single category that has upside I think it's political, you know, we saw it in the first quarter, we're starting to see some of it in the second quarter, you know as we noted in our remarks.
Speaker Change: We're seeing some money for races that are here 18 months out right now.
Speaker Change: And we breaking news here, we just saw some more this morning in the state of Georgia, which we frankly didn't anticipate. So I'm not sitting here telling you, I'm not ready to tell you that we're going to do as well.
Second quarter of politicalism we didn't first.
Speaker Change: But we're pleasantly surprised with what's going on right now in political.
Speaker Change: Aaron, Pat reference this in his remarks but despite the uncertainty and headwinds we did grow our new local direct business in first quarter and that's really a credit to our strong sales teams and our training team that you've heard us talk so often about.
Hilton Howell: Well, and here are the details. Let me have one more thing to this too. Today is kind of a propitious day in a lot of ways.
Hilton Howell: But you know, the President announced a trade deal with United Kingdom, and I think that is the beginning of the reestablishment that is to hopefully.
Hilton Howell: of Stability with regard to, you know, all your guys markets and our ad market because
so many of our clients.
Hilton Howell: I'm pulling back because they really don't know what the cost of goods sold at their products are right now. And that makes England a little nervous to take on that out in price.
Hilton Howell: You know, what they're going to do for a new Chevy, all right? So I think today is a great day and I think by the time we're at this hall in a pool from now, we're going to have a lot more Saturday.
Makes sense, okay. Thanks so much.
Thank you very much.
Speaker Change: All right, excuse me, next up we have Patrick Sholl, but before I turn it over to Patrick, I just wanted to remind participant you can press star one on your telephone keypad for question that is star one to join the question queue.
And with that Patrick Sholl, your line is now open.
Hi, thank you. Just that.
Speaker Change: Certainly, back on political. Can you maybe talk about what Putin takes between the 2026 cycle and the 2022 midterms that we should think about, or if you have any overarching?
Thoughts in the Cycle.
Let me just say this.
Speaker Change: All we know is what we know, right? So, what we saw at the last midterm, we didn't get anywhere near the kind of advice that we're saying this time around, whether or not that's going to continue.
Speaker Change: You know, we don't know. I mean, it's political as the world's worst category to predict. But when we were here four years ago at the last midterm, we didn't have these big orders and they're coming in daily.
Speaker Change: Depends on the market, but across our portfolio we're getting political advice left and right and big ones.
Speaker Change: Okay, thank you. Maybe just on the affiliate reverse negotiations.
Speaker Change: Coming up this year. How should we think about those when we feel like some of the subscriber trends for the MPPDs starting to at least moderate with some of that?
Speaker Change: In part, being influenced by the access to the network streaming services, perhaps influencing some of that. So how should we think about that affecting some of these reverse-count negotiations?
Pat Hilton: You know, Pat, it's one of the talking points in the conversation.
and we discussed.
The value
Pat Hilton: We brain, they discuss the value of their brain, we discuss our concerns with exclusivity and investments in their DTC products and they discuss their concerns with us and it's all just part of us.
Now, it's just part of the conversation.
Pat Hilton: So those conversations are ongoing and making progress but there's a lot of things that are discussed that you've hit on one of the topics that is discussed.
Pat Hilton: We're very hopeful that we will renew with all of our network affiliate partners.
Pat Hilton: It's just we got a lot of them up this year and so there's a lot of open questions but we are very hopeful that we will get it and hopefully it can be in the end for both the networks and for the affiliate partners.
Thank you.
Alright, next up we have Craig Huber.
Thank you. I want to ask about Assembly, Atlanta Assembly.
Pat Hilton: It just gives a little more flavor here on how things are going to sign up new tenants, etc.
Pat Hilton: I think you spent what upwards maybe $600 million on this. When do you think you're going to start to get a proper return on this?
Pat Hilton: I'm just talking throughout your thick thinking and I know it's a tough environment, but just talking through [inaudible]
Speaker Change: Thanks for tuning in and far be damned if I get burnt off the score.
Speaker Change: I think it's rolling through as we speak, actually. We probably have somewhere in here eight, maybe nine productions that are actively shooting at assembly. It's roughly between 21 and we're guessing this.
21 and 2600 folks on the
Speaker Change: on the lot. It's really exciting as I mentioned last quarter.
Speaker Change: Two of the shows that are shot at assembly are airing on our CVS portfolio and our NBC portfolios. Those would be, as I mentioned, opening comments beyond the gates on it.
Speaker Change: CBS , a new day time soap opera which we're extremely proud of.
Speaker Change: and then also pretty very excited about is Grossman Gardens Siding that airs on our MBC affiliate across the country.
Speaker Change: And that's in addition to a tremendous number of productions that are being shot that will be going to streaming or to theaters and all the rest.
Speaker Change: It was very clear in terms of what we were going to do that we had to get beat.
film
Speaker Change: Production, business, up, and maturing, and while the studios have been open for a year,
Speaker Change: I'm honestly the truth to this, Craig. It was last August when all the strikes kind of came to, you know, the sort of final fruition before we even got anything in to get going because while we had a long term lease with our partner in BC Universal.
Speaker Change: You know, the strikes just slowed down everything in Hollywood nationwide.
And so we haven't been really been operating for a year.
And so, also in my opening comments.
We have an added ADA proofs.
Speaker Change: That is going to be opening up for us. One of the places that we know will be out there that we will be monetizing at the very beginning of 2026, hopefully with the World Cup.
Speaker Change: is our band show and the park that's out there because we will be hosting a watching parties for the World Cup.
Speaker Change: for the Atlanta audiences here in the city and of course Atlanta is one of the semi-final post cities.
Speaker Change: And then there's a tremendous number of other opportunities that we have to fully invest.
and produce the income.
Speaker Change: That number includes, you know, the purchase of all the land, not just studio portioned, we had...
Speaker Change: Croweated it out and said, all right, this is the 50 acres and this is the revenue we're getting out of the amount of the studios. That's one return. There's a lot of returns that are going to be arriving as we finish out what we're doing in what I call phase two.
Speaker Change: But we're going to be very slow about that. We don't feel any rush.
Speaker Change: And sometimes we think these decisions that some real estate folks do is a little bit precipitous and so we're going to be cautious.
Speaker Change: and make sure we're doing the right thing. I think you're going to be impressed with what you hear to the course of this year. Yeah, and Craig, it's Jeff. If I could just address it from a financial point of view. So, in terms of getting the rest of the studios leased up, the number of inquiries are plentiful.
Speaker Change: You know, we don't want to announce anything specific until we have assigned lease.
on an operational basis. It is contributing.
Speaker Change: You know, obviously we'd like it to be higher, but it's contributing at this point. And you can see in our guide both for first quarter in this quarter that on a net basis we think that it will be zero additional capital investment. There's some returns coming.
Speaker Change: As we transition some parts of the public use to the government where there's some rebate money that comes in from that so on a net basis we think it's capital neutral this year and you know every time we sign a new lease.
Speaker Change: Real Estate, so it's a high contribution on each additional lease that we get signed.
Speaker Change: I appreciate that. Maybe can you maybe give us a sense of what percentage of the square footage is leased out at this point, if you will?
It's about, um...
Speaker Change: I mean, I think we're operating about a 75-day 80% occupancy already Thank you.
We have another 20% that we can.
you save young people.
Okay, I appreciate that. Thank you guys.
Alright, next up we have Alan Gould.
Alan Gould: Thanks for taking my question. First for Kevin, how much of an impact will it allow in grade a directly negotiate with the virtual MDPDs have on your net free trans revenue? And then I'll have a follow up after that.
Alan Gould: It would be, I would say this, the delta between what we...
Alan Gould: Charge, extraditional MVPD, and what we get paid from the networks on the virtuals is significant.
Alan Gould: I'm not sure if the law changed today that we would.
Alan Gould: To have the buddy to tomorrow renegotiate those virtual agreements at the higher rate without also paying some more of the networks. So I don't know what this sort of net impact would be. The gross impact would be significant.
Speaker Change: Okay, and then a follow-up on the unassembly. Just curious, it's been a production for it, it's been operational for about a year, you say you're 75-80 percent booked up. I'm just wondering why the guide for production company's revenue is basically flat year over year.
Speaker Change: We don't really update it based until we get signed leases, so...
Speaker Change: Yeah, there's so production companies is the studio is the studio properties as well as some other production companies Ray
Speaker Change: So, when we compare where we're at until we have signed new business on either one of those, we're projecting, you know, you can see what the guide is on a year-over-year basis.
Yup.
All right, next step, we have Steven Cahall [inaudible]
Stephen Cahill: Thank you. So you talked about your, I think, biggest kind of deregulation opportunity is looking at Swapson and Duopolys.
Speaker Change: I'm just wondering if you're also open to something that's more strategic. I realize it would have to be equity-based given that with the balance sheet you're probably not going to be paying cash.
Speaker Change: And then, second, Jeff, just wondering, you know, with the increased capacity you have under the RCF and the accounts receivable, how much, you know, between that and free cash flow do you think you can do in debt repurchases this year, especially if you continue to see debt at attractive prices in the market?
Speaker Change: Steven, let me just begin a little bit. We started our second big round in an eight. We actually did a lot of deals. The first one really was the Hoat Transaction.
Speaker Change: That we started with a higher leverage ratio and we had leveraging transactions that helped to deliver the trends. So I think there's a lot of.
Speaker Change: potential opportunities for us to do strategic transactions with a variety of different sort of
Speaker Change: So, you know, we're looking at all kinds of things. I think the first sort of opportunities would likely be if we can find a way to get them to the finish line would be swaps because that's just assets for assets.
Speaker Change: But those are always hard to get done, but, you know, we're moving aggressively at all fronts.
Speaker Change: Yes, Steven. And I think there's a little bit of interrelation between the two questions. I mean, we can do some of the smaller, you know, we can do some of the smaller transactions. There's
A plentiful number of opportunities out there to look at.
Speaker Change: And if there's something that's strategically important to us, I wouldn't rule us out as a cash buyer on some of that in addition to, you know, as Hilton said.
Speaker Change: The guiding principle for us is potentially using M&A to deliver and that can be a combination of things for the right transaction. It can be a combination of things.
Speaker Change: In terms of where we go directly with the extra proceeds, I think it's wherever we can get the most bang for the buck.
Speaker Change: This morning it appears that a lot of people beat us to market on being able to go buy back debt, so yeah, we'll see where things settle out and we have the liquidity we...
Speaker Change: are obviously managing the capital structure in a very judicious way and we'll continue to do so and be mindful of near term maturities relative to longer term opportunities to capture larger discounts.
Speaker Change: Steven, it all goes back to every deal is different, right? Because there's different synergies with each different transaction.
Thank you.
Speaker Change: All right, seeing only one question left in Q, I'll remind participants, you can press star one on your telephone keypad if you would like to join the Q, that is star one to ask a question. But the final one in Q so far, David Hamburger, your line is now open.
David Hamburger: Hi, thank you very much. I have two questions, one to follow up to the last question, but first, the cost-cutting effort, I believe, Kevin, you had mentioned that, you've realized...
60 million, or at least...
David Hamburger: You have seen visibility to the $60 million in reduction of costs. I wonder if you could just elaborate, it looks like, you know, costs were down anomaly in the first quarter, it looks like second quarter, not down.
David Hamburger: very much when we could start to see that kind of the station expense line item and then is there an opportunity to drive costs down even further than that?
Jeff: Yes, it's Jeff, David, I'll take it and others can weigh in as well, so...
David Hamburger: Yeah, so what we have taken all of the actions that made up the 60 million that we announced so you know when we say we have achieved or even exceeded that 60 million number that's everything we identified has been implemented so now you will see it flow into the numbers.
David Hamburger: I would say some of the cost items are not perfectly linear and we said from the beginning of this exercise that the goal here was to get expenses
David Hamburger: Ideally to be negative, but also at a minimum get below inflationary levels and so our guide for second quarter is below inflationary levels.
David Hamburger: We're continuing to evaluate it every day and if there's other things that we see that are out there.
David Hamburger: There is a sense of, you know, really understands the importance of it as we run the business, especially with the top line trend. So, we're not stopping just because we quote unquote achieve the number. We will see that flow through.
prospectively as we move through the year.
David Hamburger: You know, but not plans at this point where there will be a second round of announcements of any wide-ranging things. I mean, it's, you know, it will be continuing to optimize the business, frankly just being good stewards of the business and thinking about how we manage it over time.
Thank you very much.
Speaker Change: And then I guess just with corporate expenses look like it was up a little bit year over year, is there anything kind of notable there particularly?
Speaker Change: I wouldn't say anything that's notable. I mean, they can bounce around a little bit. They're not always, you know, things aren't always perfectly linear.
And then just finally on...
Speaker Change: The AR Securitization looks like, you know, you drew on 100 million in the quarter, the cash balance.
Speaker Change: for the company's up to 210 million, so it looks like notwithstanding the 17 million of debt you reduce the vast majority of that sitting on the balance sheet, is there anything near term for which you require kind of more elevated cash balance on the balance sheet? [inaudible]
Speaker Change: Now, look, the AR facility is also a revolving facility, so it's a very nice source of inexpensive liquidity for us. You've seen what we've done in open market and power repayments of debt.
Speaker Change: We do have some, you know, we have some smaller maturities, regular amortization stuff later this year and a small maturity next year.
Speaker Change: And then we'll see where things are at in terms of where to deploy it next, whether it's more open market repurchases or some of it gets used along the way if we identify interesting tuck-in type acquisitions.
Speaker Change: But to more directly answer the question, we don't need $200 million of cash sitting on the balance sheet. It's not, you know, we're going to, we can either pay it on the AR facility or deploy it elsewhere as we see opportunity.
Okay. Thank you very much.
Speaker Change: Alright, well thank you operator and thank you everyone for joining us this afternoon. I know you guys had a lot to listen to because I know there's been calls so long the hour, every hour today. We really appreciate you spending time with us and we look forward to talking to you next quarter.
Speaker Change: And with that, ladies and gentlemen, this does conclude your call. You may now disconnect your lines and thank you again for joining us today.