Q1 2025 Gray Media Inc Earnings Call
Bing!
Speaker Change: Good afternoon, ladies and gentlemen and welcome to the great 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 t-pad.
Speaker Change: Again, that star won to join the question queue. 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 mentioned, this is Hilton Howell with Chairman and CEO and a lot of great media.
Speaker Change: I want to thank all of you for joining our first quarter of 2025.
Speaker Change: Earnings Called With Be Here in Atlanta, as usual, are all of our Executive Officers. Pat LaPlatney, our President, Co-CIO, Sandy Breland, our Chief Operating Officer.
Speaker Change: Kevin Latek, our Chief Legal and Development Officer, and last but not least, Jeff Gignac, our Chief Financial Officer.
Speaker Change: And also as usual, we will begin with a disclaimer that Kevin will provide. Alright, thank you, Hilton, and good afternoon everyone.
Speaker Change: Today we follow with the SEC on Form 8K our earnings release and an updated
Speaker Change: Included on the call, maybe a discussion on non-GAAP financial measures, in particular, Justice Ibiza, leverage ratio denominator and certain leverage ratios. These metrics are not meant to replace gap measurements, but are provided as supplements to assist the public and its analysis and valuation of our company.
Speaker Change: for the discussions and reconciliations of the company's non-GAAP financial measures to the comparable 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 of the SEC.
Speaker Change: We undertake no obligation to update or revise any photo statements, 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 finished much better than our guidance on both revenues and expenses.
Hilton Howell: Total revenue in the first quarter of 2025 was $782 million, a decrease of 5% from the first quarter of 2024, and 1% above the high ends.
Hilton Howell: of Our Guidance for the Forum. Total operating expenses before depreciation and resuscitation 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 loss was $9 million in the first quarter of 2025 compared to net 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. Recall 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 for Folio. And 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 year.
Hilton Howell: In addition to these operating results, we continue to make progress in strengthening our balance sheet during the first quarter.
Hilton Howell: During the first quarter, we continue to prove our commitment to deliver by reducing our outstanding and debtedness 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.
Hilton Howell: On March 34, 2025, we announced the extension and increase in the size of our account for receivable 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 and received from so many of our commercial banking partners and their 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 Suns and 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. The combination of our premier local news franchises with 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 WD Union 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, Hear Me, Seeing, Highlighting Mental Health Issues.
Hilton Howell: WA and Atlanta, WA, W-A-D-E, and Louisville, and Investigate, TV, Grays, National, Investigated the unit, all received national headline on our awards.
Speaker Change: And lastly, our very own Sandy Breland, sitting to the right of me right here. His name is 2025 John F. Kogan.
Hilton Howell: Distinguished Award winner by the Radio Television Digital News Association for her unwavering dedication to journalism and freedom of the press.
Hilton Howell: The Lamentum at Assembly Studios also continued in the first order of 2025.
The new CBS soap opera called Beyond the Gates.
Hilton Howell: 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.
Hilton Howell: We are thrilled, 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.
Hilton Howell: Outside of the assembly studio gates, we're working with other companies who are actively investing their time and their money to bring to life other parts of our assembly Atlanta development.
Hilton Howell: We expect to have more announcements about these exciting plans later in 2025.
as we have said repeatedly. [inaudible]
Hilton Howell: 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.
Hilton Howell: You'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. Thank you very much.
Matt: 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.
Matt: 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.
Matt: Remember, about half of our declining core, $9 million is attributable to the Super Bowl bearing on our 33 Fox channels in 2025, compared to our 54 CBS affiliates in 2024.
Matt: On the positive side, our Fox channels are up 50% versus the prior Fox sweepable, with 9 million of core ad revenue in 2025.
Matt: For the category perspective, Automotive Cayman is 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.
Matt: We think continued high interest rates also are weighing out amount of demand.
Matt: Other categories linked to consumer discretionary spending like restaurants and department stores were soft while more essential categories like education and financial services performed better.
Matt: From client conversations, we also believe that some categories say, quote, beat the tariff effect, including automotive.
Matt: There are a few bright spots. Legal was up a couple of points and has grown to a low double fidget category for us.
Matt: 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.
Matt: Finally, our new local direct business grew slightly in the first quarter of 2025.
Matt: Given the economic uncertainty, we're very pleased that our multimedia sales teams are continuing to grow on a new advertiser base.
Matt: The very bright spot in the first quarter of 25 was political ad revenue.
Matt: Our guide for the first quarter of 25 was two to four million. Why?
The actual results came in at 13 million.
Matt: Most of this revenue was generated in the competitive Supreme Court race in Wisconsin.
where our stations cover most of the state.
Matt: We saw a meaningful spending of the panhandled Florida and the race for Matt Gaetz former Congressional seat. They also benefited from a few special elections in the first quarter. And finally,
Matt: 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 to 90 of our television stations.
Hilton Howell: We're very excited to watch that part of our business grow, providing guidance to the second quarter in 25 or for the year in the current environment's particularly challenging.
Hilton Howell: Based on current conditions, we're guiding Second Corps Corps at Revenue to be down mid-single digits. The NCAA AA Final Four and Championship game on CBS provided about a $5 million benefit in early April .
Hilton Howell: Across categories in second quarter we're seeing a mixed bag with some categories like automotive and restaurants pacing lower.
Hilton Howell: 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.
Hilton Howell: We finished the quarter at 2.92 times secured leverage, then 5.48 times total leverage each has defined in our senior credit agreement.
Hilton Howell: 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.
Hilton Howell: 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.
Hilton Howell: 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.
Hilton Howell: 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.
Hilton Howell: 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.
Hilton Howell: 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.
Hilton Howell: 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.
Hilton Howell: 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.
Hilton Howell: 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.
Hilton Howell: 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.
Hilton Howell: and our Q2 guide is that expenses will remain below inflationary levels.
Hilton Howell: The first time since the COVID slowed down that we posted lower first quarter broadcasting operating expenses, then we had in the prior comparative year period.
Hilton Howell: 1st quarter of 2025 was also the 5th 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 . A 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 in the strength.
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.
Hilton Howell: 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 seeing several already in queue for a step we have Dan Kurnos.
Dan Kernos: Great, afternoon. Maybe we'll start Hilton, Jeff, obviously everybody's talking about, you know, D-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? You know maybe just I'll open it there and then I'll ask a follow-up [inaudible]
Ehh...
Dan Kernos: I think, actually, everyone is talking about the new poll, but I don't think they're talking about fix or things. We need a new post on the Trump poll, Kevin.
It wasn't me, so you're lucky Thank you.
Dan Kernos: We're 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 inter-in-two swaps.
Dan Kernos: to create new dewaplies or improve our strategic position, but we'll have to wait and see those. As you 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 think we know. [inaudible]
Kevin: The public lens as it were as you go into your reverse negotiations, your affiliate negotiations in the back half of this year with your fixed fee partners. I mean, I don't think anyone takes that number necessarily seriously, but it is a clearer shot at the networks. Does it have any impact bearing on the outcome or your view as you address? Yes.
Your Affiliate Negotiations
Speaker Change: We're not going to comment on Simonton's piece, only that for other folks to do, but we would say is that we are encouraged by comments from the chairman.
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.
Hey everyone, thanks for having me on.
Speaker Change: 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 lift 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 do-op plays.
Speaker Change: The margin improvement varies radically based on what we are buying in what kind of market, the strength of our station and the strength of the other stations. So we are not...
Speaker Change: In our experience of having a number of deWopolis 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 and some of our best.
Speaker Change: Opportunities will be at both ends of the spectrum. So, we're looking to-
Speaker Change: Reload the company, deliver to these transactions, improve with 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 up, but we'll walk away.
Schultz: Aaron, Mrs. Schultzer, let me add one thing to that.
It's an apparently...
Schultz: universally positive in terms of saving money, but it also gives us, because we are so focused.
Schultz: on the delivery of local news, local content, local sports, you got to give the audience something to view.
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, advise, and aside from lapping political crowd out that you had last year and the second half of this year, any reason for optimism and key core verticals that they can start to gain momentum as you roll into the back half of this year.
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 you know, in regard to the second half of the year, it looked at the services categories as we talked about, so legal health.
Speaker Change: by Home 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 first quarter, we're starting to see some of it in second quarter, you know, as we noted in our remarks.
Speaker Change: We're seeing some money for races that are, you know, year 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, political, as we did in first. First.
Speaker Change: But we're pleasantly surprised with what's going on right now in political. Aaron, Pat referenced 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.
Speaker Change: Well, anyway, this is Hilton. Let me have one more thing to this too. Today is kind of a propitious day in a lot of ways.
Speaker Change: which 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.
Speaker Change: of the stability with regard to your, all your guys markets and our ad market because so many of our, so many of our clients.
Speaker Change: are pulling back because they really don't know what the cost of goods sold to their products are right now. And that makes it a little nervous to take on that out in price.
Speaker Change: You know, what they're going to do for a new Chevy, alright? So, I think today is a great day and I think by the time we're at this hall in a portal from now, we're going to have a lot more Saturday.
Makes sense, okay. Thanks so much.
Thank you very much. Thank you.
Speaker Change: Alright, excuse me, next up we have Patrick Scholl, 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. [inaudible]
Hi, thank you.
Speaker Change: Certainly back on political. Could you maybe talk about the needs of puts and takes between the 2026 cycle and the 2022 midterms that we should think about or if you have any like overarching. Thank you.
Thoughts on 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 seeing.
and this time around.
Speaker Change: Whether or not that's going to continue. You know, we don't know. I mean, it's political is 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: It depends on the market that across our portfolio, we're getting political ad bias left and right.
and the 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 see 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-culta negotiations?
Speaker Change: You know, Pat, it's one of the talking points in the conversation.
and we discussed.
The Value
Speaker Change: Dewey 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. Thank you.
Speaker Change: 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.
Speaker Change: We're very hopeful that we will renew with all of our network affiliate partners.
Speaker Change: You know, 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 remitted and that hopefully it can be the end and 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.
Speaker Change: It just gives a little more flavor here on how things are going to sign up, new tenants etc.
Speaker Change: I mean, 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?
Speaker Change: I know it's a tough environment, but just talk me through. [inaudible]
For more information, visit www.FEMA.gov
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.
Twenty-one and twenty-six hundred 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 MBC portfolios that we those would be, as I mentioned, opening comments beyond the gate it's on.
Speaker Change: CBS , a new daytime soap opera, which we're extremely proud of.
Speaker Change: And then also pretty very excited about is Rosemond Gordon's siding that airs on our MBC affiliates across the country.
Speaker Change: They're being shot, they'll 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.
subscribe and ring the bell to watch future videos
Speaker Change: production business up and maturing, and while the studios have been open for a year.
Speaker Change: Honestly, the truth of it is, 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 all we had a long-term lease with our partner NBC Universal.
Speaker Change: You know, the strikes just slowed down everything in Hollywood nationwide.
And so we haven't really been operating for a year.
and so, also, in my opening comments.
We are an added 80 acres.
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.
Speaker Change: 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 watching parties for the World Cup.
Speaker Change: for the Atlanta audiences here in the city, of course Atlanta is one of the semi-final host cities.
Speaker Change: and then there's a tremendous number of other opportunities that we have to fully invest.
on that six hundred million dollars because you got to remember them. [inaudible]
Speaker Change: That number includes, you know, the purchase of all the land, not just studio portioned, we have...
Speaker Change: Pro-aided 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, there are the number of inquiries are plentiful. [inaudible]
Speaker Change: You know, we don't want to announce anything specific until we have assigned lease.
Speaker Change: on an operational basis. It is contributing. 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 and 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. But we're out of some...
Re-bate money that comes in from that so- [inaudible]
Speaker Change: On a net basis, we think it's capital neutral this year and every time we sign a new lease it's real estate so it's a high contribution on each additional lease that we get signed.
It's about
Speaker Change: I mean, I think we're offering about a 75-day 80% occupancy rate . .
Speaker Change: We have another 20% that we can, you know, fully fill up and I don't know what's going to happen. I mean, the President made tweets on Sunday about foreign tariffs. But, you know, the request that we have on our region and so we're taking a step us up.
Okay, I appreciate that. Thank you guys.
All right, next up we have Alan Gould.
Alan Gould: Thanks for taking my question. First for Kevin, how much of an impact would it allow in great a directly negotiated with the virtual MDPD's 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 that the delta between what we...
Speaker Change: Charge the traditional MVPD and what we get paid from the networks on the virtuals is significant. I'm not sure if the law changed today that we would...
Speaker Change: to have the buddy to tomorrow renegotiate those virtual agreements at the higher rate without also paying some more to the networks. So I don't know what this sort of net impact would be. The gross impact would be significant.
Speaker Change: Just curious, it's been in production for it, it's been operational for about a year, you say you're 75-80% booked up. I'm just wondering why the guide for production companies revenue is basically flat year over year.
Speaker Change: We don't really update it based until we get finaly since, so... [inaudible]
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 your basis.
Okay. Thank you.
Yep.
All right, next step we have Steven Cahill.
Speaker Change: 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: for anything sizeable. But are you open to finding opportunities, especially if it includes a lot of
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 pre 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. When we started our second big round in the day, 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 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 in 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 transactions.
A plentiful number of opportunities out there to look at.
Hilton Howell: 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.
Hilton Howell: The guiding principle for us is potentially using M&A to deliver and that could be a combination of things for the right transaction. It could be a combination of things.
Hilton Howell: 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.
Hilton Howell: This morning, it appears that a lot of people beat us to market. I'm being able to go buy back dead. So, yeah, we'll see where things settle out and we have the liquidity. We...
Hilton Howell: are obviously managing the capital structure I think 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.
All right.
Seeing only one question left in queue, I'll remind participants.
Speaker Change: You can press star 1 on your telephone keypad if you would like to join the queue that is star 1 to ask a question.
David Hamburger: But the final one in queue 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 that Kevin, you had mentioned that you've realized 60 million or at least
David Hamburger: You have received 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, you know, kind of in the station expense line item and then is there an opportunity to drive costs down even further than that?
David Hamburger: Yes, it's Jeff, David, I'll take it and others can weigh in as well, so...
David Hamburger: Yes, so we have taken all of the actions that made up the 60 million that we announced.
David Hamburger: 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, everybody understands the importance of it as we run the business and 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.
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.
David Hamburger: 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.
David Hamburger: So nothing really notable, it could be a couple million, you can bounce around throughout the year.
and then just finally on...
David Hamburger: The AR Securitization looks like you drew on 100 million in the quarter, the cash balance.
David Hamburger: 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]
David Hamburger: Now, we'll 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 that.
David Hamburger: We have some smaller maturities, regular amortization stuff later this year and a small maturity next year.
David Hamburger: 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.
David Hamburger: To more directly answer the question, we don't need $200 million of cash sitting on the balance sheet and it's not, you know, we're gonna, we can either pay down the air facility or deploy it elsewhere as we see opportunities.
Okay. Thank you very much.
David Hamburger: All right. Well, thank you, Operator, and thank you, Evelyn, for joining us this afternoon. I know you guys had a lot to listen to because I know there's been calls sort of on the hour, every hour of today. We really appreciate you spending time with us and we look forward to talking to you next quarter.
David Hamburger: 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.
Thank you, Chris.