Q2 2025 Nexstar Media Group Inc Earnings Call
Good day, and welcome to the Nexstar Media Group's second quarter 2025 conference call. Today's call is being recorded.
I'll now turn the conference over to Joe Deon investor relations. Please go ahead. Sir.
Thank you, Melissa. And good morning everyone. I'll start by reading the Safe Harbor language and then we'll get right into the call. All statements and comments made by management. During this conference call other than statements of historical fact. May be deemed forward-looking statements for purposes of the private Securities. Litigation Reform, Act of 1995.
Next, our caution is that. These forward-looking statements are subject to risks and uncertainties, that may cause actual results to differ materially from those reflected by the forward-looking statements made during this call.
For additional details on these risks and uncertainties, please see next door's annual report on form. 10K for the year. Ended December 31st 2024 as filed with the Securities and Exchange Commission.
And next to our subsequent public filings with the SEC.
Next door to takes no obligation to update or revise, any forward-looking statements. Whether it's a result of a new information, future events or otherwise.
It's now my pleasure to turn the conference over to your host. Next to our founder, chairman and chief executive officer Perry Sook Perry. Please go ahead.
Thank you, Joe and good morning, everyone. We appreciate you all joining us today. Mike Barrett, our chief operating officer and Leanne GHA. Our Chief Financial Officer are with me here this morning.
Next to our delivered results, we had another solid quarter. Financial results from our second quarter showed net revenue, adjusted EBITDA, and adjusted free cash flow benefiting from better-than-expected advertising revenue, stable distribution revenue, and strong expense management.
Overall, our core advertising business remains resilient while the pay TV landscape continues to evolve as we had anticipated.
Though we have yet to see a definitive turnaround in video. Subscriber Trends. We are encouraged by consistent early signs of improvement with good reports in recent weeks from 2 of our largest MVP DS.
For the first half of 2025 next to our generated adjusted e with the a of 770 million and adjusted free. Cash flow of nearly 450 million.
We returned 238 million or 53% of adjusted free cash flow to shareholders through. Share repurchases and dividends reducing our shares outstanding by about 1%. While allocating 132 million to debt repayment,
Near the end of the quarter. We refinanced the company's credit facilities and term loans, further strengthening our capital structure and our financial flexibility by extending maturities, which positions our balance sheet. Well, in anticipation of expected regulatory relief on the ownership front.
The case for local broadcast ownership deregulation, remains strong and extends far beyond competitive fairness.
It's becoming increasingly clear that bias acknowledge and now admitted an editorial coverage by Legacy National networks. False information provided by Ai and social media. Disinformation are making it almost impossible for Americans to distinguish between fact opinion and fiction.
We firmly believe that nexstar and the local broadcast industry at large are a solution to these threats.
Every day, our local and national news teams, bring the public unbiased. Fact-based news reporting and information from 113, newsrooms in markets across the country and nationally on news Nation.
We employ almost 6,000 journalists in total which is more than any other Media company in the United States.
Our news teams all adhere to a strict journalistic code of ethics and are dedicated to Bringing communities trusted information and local stories that matter to them.
For example, in Central Texas, during the immediate aftermath of the devastating Guadalupe River, flooding. Our local reporters were on the ground providing essential news coverage and safety information to our local communities, as well as National audiences via news Nation.
In addition to covering those events. Next, our station teams in abalene San Angelo and Austin came together to raise nearly 1.4 million dollars for flood victims during a 1-hour telephone.
Many also volunteered at local relief organizations to help gather and distribute supplies to those in need.
Meanwhile on big Tech social media platforms charlatans chasing clicks circulated misleading videos. Some AI generated and others recycled from unrelated disasters in different states or countries. Falsely claiming to depict the central Texas floods.
X unchecked reach and prioritization of Engagement over accuracy fuels, the rapid spread of fake news.
Next virus, commitment to high quality, trustworthy journalism continues to deliver strong viewership earning trust along with local and National fiction eidos.
At Fontes, the respected third-party media watchdog has rated virtually all news programming provided by Nexstar local stations, as well as News Nation, as politically neutral with a reliable rating of reliable for both analysis as well as reporting.
In the second quarter, our local journalists earned 52 Regional Edward. Our Mo awards for our outstanding journalism and exceptional locally, produced news programming.
Public trust and local broadcast journalism remains strong with American sighting, local television news as the number 1. Most trusted new source. According to a 2024 TBB survey audiences of all ages, and demos are turning into our local news and to our programming with nearly half of next star's, 2024 station, viewership coming from non-network programming.
That last point is important. We've seen the number of publications misrepresent data, from the latest Nielsen gauge reports, by stating that streaming accounts for over 50% of total viewership.
The data reflected in that report only includes information from nielson's National panel. It completely excludes local station viewership of local content, which we know to be substantial. If you look exclusively at National viewership of long form. Ad supported programming the metric, that matters most to advertisers broadcasting and cable together account for 70% of total ad impressions.
We believe that the continued strength of our broadcast and cable news assets, is a direct result of our long-term, strategic focus on high impact, news and Sports Programming.
We began in 2019 by converting WGN. America, the Entertainment Network, we acquired in the Tribune, acquisition into news Nation,
We made a similar strategic decision with the, our acquisition of the majority stake in the CW broadcast network in 2022. Shifting its focus from scripted series to more broad-based and audience expanding programming, including a Full Slate of live sports. I proud to share that. We've achieved several operational, Milestones during the quarter highlighting the continued success of our strategies. In April, we celebrated news Nations, 1 year, anniversary of expanding. Its news programming to become a 24/7 Cable News Network.
In June news, nation was ranked the number 1, basic cable network for year-over-year, growth with overall viewership increasing by nearly 50%. And by 67% in the adults age, to 2554 demographic, according to Nielsen,
We Believe news Nations programming and unique fact-based reporting is resonating with viewers who are looking for a refreshingly balanced and impartial take on the news.
And at the CW, we've now achieved 5 consecutive quarters of audience growth. And the CW was the number 8, ranked Network in total audience for first audience for for, for the first half, uh, total audience growth, I should say, for the first half of 2025,
this is a direct result of the success of our programming strategy, including the introduction of sports, which now accounts for over 40% of our total programming hours.
Turning to regulatory reform. There have been significant positive developments since our last earnings call.
In mid July, the FCC moved to refresh the record on the national ownership. Cap opening the door for a new order from the FCC to modify or eliminate the cap. Perhaps by the end of this year, we filed our comments on Monday and that proceeding and on July 23rd, the 8th circuit they vacated a top 4 rule which prohibits the owner of Television Broadcast stations for owning 2 of the top 4 rated stations in the local market. Finding that the fcc's historical justification for retaining. The rule was arbitrary and capricious.
We applaud Chairman's car vocal support at the Court's decision, describing the fcc's prior retention of the top 4 Pro prohibition, as a decision to retain a regulation. That does not match Marketplace realities.
In summary. They continued success and consistency of nexstar financial performance. Reflects our stable Diversified Revenue, base disciplined operations, and continued execution across our portfolio. With our unmatched scale. Robust free cash flow and consistent track record of delivering value. We remain. Well, positioned to seize the significant opportunities that lie ahead.
Again, in 2026.
With that said, let me turn the call now over to Mike Barrett. Mike.
Thanks Perry and good morning everyone. Next, our delivered second quarter, net revenue of 1.23 billion dollars, a decline of 3.2% compared to the prior year, primarily reflecting the year-over-year reduction in political advertising.
Recorded distribution, revenue of 733 million was essentially flat compared to the prior year quarter. Primarily reflecting the modest number of subscribers renewed in 2024 compared to 2023 and mvpd subscriber attrition
Partially offset by contractual rate escalators growth, in VMP subscribers and the addition of CW affiliations on certain of our stations.
Although the industry continues to see a subscriber attrition. We know recent earnings reports from our distribution Partners suggest marginal improvements and subscriber trends.
Several industry. Observers have noted Charters trending video performance with at least 1 highlighting video as a significant opportunity in the context of the Cox transaction.
We're encouraged by those Trends and continue to monitor the space closely. As we work to secure agreements, that are better aligned with the value next to our deliveries to our partners and their customers.
Advertising revenue of 475 million decreased, 47 million or 9%, over the comparable, prior year quarter.
Primarily reflecting a 36 million year-over-year, decrease in political advertising.
Non-political advertising declined by 2.5% year-over-year slightly better than our expectations.
Non-political advertising was impacted by a high single digit decline in goods-based, advertising of, which more than half was attributable to the automotive category.
and a slight reduction in services-based advertising though, this segment remains much more stable and resilient overall
contributing positively to the quarter. We saw growth in key categories, including attorneys and home repair, along with improved performance from some of our national digital businesses, including best reviews.
We generated approximately 9 million dollars in political advertising Revenue during the quarter.
Primarily driven by issue. Spending related to the 1 big, beautiful Bill. The New York City, mayoral primary and the Virginia primaries.
Looking ahead to the third quarter non-political advertising is currently forecast to be down in the low single digits on a year-over-year basis.
This is despite the comp with 2024 Olympic related advertising and the benefit in part from the lack of political crowd out in the quarter.
Although some broader economic headlines, may suggest caution our view of the advertising Outlook remains stable for now.
As we noted on last quarter's call approximately, 15% of our total revenue is tied to Goods based businesses. That could be impacted by tariffs.
Turning to the CW.
As Perry, mentioned earlier, we continue to see favorable Returns on our programming Investments with sports. Now, accounting for more than 40% of the CW's programming hours.
And we continue to build the CW Sports portfolio.
During the second quarter, we renewed our agreement with the Pax, 12 Conference to nationally broadcast 9 college, football games, this fall including a new Pac, 12 double feature on Saturday. September 6th, showcasing 2 of the key schools that will anchor, the expanded PAC 12 Conference next year.
We also announced a multi-year partnership with professional Bowlers Association to are 10 live events on Sunday, afternoons, beginning in 2026.
And in July we announced a multi-year agreement with the Professional Bull Riders to be the exclusive live broadcast partner of the PBR teams series on Saturdays and Sundays. The CW will are the first of 11 PBR events, this year, this coming Saturday, August 9th,
Our Sports Programming continues to perform well demonstrating both the power of broadcast television and the CW Network specifically.
Both WWE and XT and NASCAR Xfinity racing. Ratings are up 7% and 16% respectively versus second quarter of last year when those events were primarily on cable,
Moreover, our entire CW, programming strategy is working.
As mentioned we've seen, 5 consecutive quarters of prime time. Ratings growth elevating the CW and position as the eighth. Most watched Network overall, for the first half of this year.
On Any Given night, CW is now beating the Big 4 networks with regularity with 126 instances since the beginning of this broadcast season. In October 2020, 2024 versus 53 in the entire prior season.
Firmly establishing the CW as a major Broadcast Network.
Reduced amortization of broadcast rights and lower operating expenses. Following our Q4 restructuring,
our outlook for the year remains unchanged and we continue to project improved profitability of about 25% in 2025 over 2024 with our continued, expectation of achieving profitability in 2026
In addition, the company continues to benefit from moving CW, affiliations to our owned and operated stations.
During the quarter. We finalized agreements to move 3 additional CW. Affiliations next month. The next star stations in Charlotte North Carolina Erie Pennsylvania and Elmyra New York.
To close. Let me reiterate confidence in next star's. Long-term Outlook and the enduring strength of our broadcast business model.
Our news and and sports focused programming strategies continue to deliver demonstrable results for the CW and news nation. And we remain committed to unlocking greater value from these valuable assets as our audiences continue to expand
As the industry continues to evolve, we believe the momentum is shifting in favor of our core businesses. We remain committed to pursuing opportunities that drive long-term value for our shareholders.
With that, it's my pleasure to turn the call over to Leanne for the remainder of the financial review. Leanne.
Thank you, Mike and good morning everyone. Uh, Mike gave you most of the details on the revenue side and on the CW. So I'll provide a review of expenses, adjusted Ava, and adjusted free cash flow along with review, a review of our Capital allocation activities.
Uh, together second quarter, direct operating and sgna expenses. Excluding DNA and corporate expenses, declined by 13 million, or 2%, primarily driven by our operational. Restructuring initiative. Take undertaken in the fourth quarter offset in part by increased variable expenses related to our growth, in digital Revenue,
uh Q2 20225, total corporate expense was 64 million, including non-cash compensation expenses of 21 million compared to 54 million, including non-cash compensation, expense of 20 million in the second quarter of 2024, the 10 million dollar increase is primarily due to a 1-time expenses associated with the refinancing, we completed in the quarter,
Q2 2025 depreciation and amortization was 197 million versus 208 million in the comparable prior year quarter a decrease of 11 million
Of these amounts included in our definition of adjusted ibida. Is 79 million related to the amortization of broadcast rights for Q2 of 2025 compared to 87 million. For Q2 2024 the decrease in amortization of broadcast rights by 8 million was primarily due to lower programming costs at the CW versus the comparable prior year quarter.
Q2 2025 income from Equity method Investments, which primarily reflects our 31% ownership in TV, Food Network declined by 5 million versus the comparable. Prior year quarter primarily related to TV Food, Network's lower Revenue,
Putting it all together on a Consolidated basis. Second quarter. Adjusted Eva was 389 million. Representing a 31.7% margin and a decrease of 25 million from the second quarter 2024 of 414 million.
Moving to the components of free cash flow and adjusted free. Cash flow.
Second quarter capex is 29 million a decrease from 37 million. In the second quarter of last year due primarily to timing of capex projects in to lower total amount of capacity in non-election years.
Second quarter, net, interest expense was 97 million. A reduction of 16 million from the second quarter of 2024 on a cash basis. This compares to 94 million in Q2 2025 versus 110 million in Q2 2024 the reduction interest expense was primarily related to a reduction in sofa and nexstar is reduced debt. Balances
In the second quarter, operating cash taxes were $140 million, compared to $164 million last year.
Payments for capitalized software obligations and pension credits. Net, a proceeds from disposal of assets Insurance, recoveries, or 14 million versus 16 million in last year's Q2
Cash distributions from the Food Network, were 1 million in the second quarter, which amount is captured in our free cash flow and adjusted free. Cash flow definitions this amount reflects our pro-rata share of distributions to cover tax from our proportionate share in the income of the JV.
Included in the second quarter's adjusted IBA doc but excluded from adjusted free cash flow is 11 million of income for amortization from Equity method Investments, which is primarily our pro-rata share of food network, net income in the second quarter of 2025.
In Q2 programming amortization costs were lower than cash payments by million dollars compared to Q2 24 a certain deferred programming payments were paid.
Putting this all together Consolidated. Second quarter, 2025 adjusted free cash flow was 101 million as compared to 77 million in last year's Q2
Weekly based on the current year yield curve and our mandatory amortization payments. Q3 interest expenses expected to be in the 93 million range,
Uh, Q3 2025 cash taxes are expected to be in the 35 to 40 million range.
And, uh, in Q3 2025, cash distributions from the Food Network are expected to be in the low to mid-single-digit million dollar range, and payments for programming are expected to be in excess of amortization by about $25 million, due primarily to prepayment of future programming payments and payment of deferred programming.
Capital turning to Capital allocation in our balance sheet together with the cash from operations generated in the quarter and cash on hand.
We returned $106 million to shareholders, comprised of $56 million in dividends and the repurchase of $50 million of stock at an average price of $199.71 per share, reducing our shares outstanding.
During the quarter, we completed the refinancing of our revolver Term Loan, a and Term Loan, B, and Mission completed. The refinancing of its revolver in connection with the refinancing. We extended our maturities on our revolvers and Term Loan, a to June 2020, 3030 and extends the maturity on our Term Loan B to June 2032. In addition, we increase the size of our revolver to 750 million and eliminated the 10 to 11 basis. Point credit, spread adjustment across all the facilities we respond
In addition, we converted our covenant calculation to reflect a last 8 quarters annualized ebaa calculation for the denominator to better. Align with broadcast industry, practice and better reflect our leverage across an election year where we generate additional political advertising revenue and a non-election year when we do not
We close the refinancing on June 27th. And next, our outstanding debt at June 30th, 2025 with 6.4 billion, our reduction of 100 million 101 million for the quarter. As we made optional repayments on our debt balances,
Our cash balance, at quarter end is 234 million, including 23 million of cash related to The CW.
Because we designated the CW as an unrestricted subsidiary, the losses associated with the CW, are not included in our calculation of Leverage for purposes of our credit agreement. As such our net first lean Covenant ratio for nexstar at June 30th 2025 which is now calculated on the last 8 quarter annualized basis was 1.81 times which is well below our first lean and only Covenant of 4.25 times.
12 on that, leverage for nexstar was 3.19 times. At quarter end, these lever statistics are calculated pursuant to the description in our credit agreement.
Uh, with that, I will open up the call for questions. Operator, can you go to our first question?
Thank you.
If you'd like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue.
You may press star 2. If you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
To allow for as many questions as possible. We ask that you each keep to 1 question. Thank you. Our first question comes from the line of Dan kernels with the Benchmark Company. Please proceed with your question.
Great, thanks. Good morning. Uh obviously. Nice print guys, um, Terry just any quick. Thoughts on chairman Carr, continuing to write letters to the networks and if there might be, any changes coming in the way, the affiliate relationships are handled. And then from an m&a perspective, just how do you think about the in-market opportunity versus cap expansion? If the cap does get raised? You've obviously got JSA to go after you have a very enviable balance sheet position. So if there's any way to frame, broadly, sort of what you might be looking at, or any size, parameters to consider, that would be super helpful. Thank you.
we'll we'll start uh working backwards uh, on on on that, I would say that and as far as acquisition opportunity growing, our national footprint, probably has more strategic importance to the company than simply doubling up in markets, where we have a single station, which is we're already kind of
Of of the m&a landscape. Um, obviously with the balance sheet. You know, we we would be willing to uh increase our leverage profile, um slightly uh you know, for the right acquisition. Um and then leveraging, you know the the uh free cash flow of the target. I mean, you can do your own math to determine what you know what the upside of of those could be um as it relates to Chairman Carr and sending letters to the to the networks uh you know from from our perspective. You know that's at this point between chairman Carr and the networks and we obviously have a we'll have a vested interest in the outcome. Uh but I think that, you know, the administration and and chairman Carr wants to make sure that the relationships are in some semblance of balance, you know, it's a symbiotic relationship. The networks need us to distribute their programming and their advertising. We rely on the networks for programming, although, to the extent that you know Network by Network.
You know, 1 of the things we buy from the network is exclusivity. In addition to the programming to the extent, the programming is less and less exclusive. It is less less valuable to us. So you know we'll we'll make our case with the networks in private negotiations. And I think it's it's certainly proper for chairman car to uh, to to to like take a look at the relationship and determine if things are in balance or if things have swung too far, 1 way or the other and we certainly applaud him for asking the questions.
Thank you, Perry.
Thank you. Our next question comes from the line of Jason, bazinet with City. Please proceed with your question.
I just asked a 2-part question on M&A. If that's okay.
um,
Point number 1: Would you say it's important to you to increase?
Your your oh and O's and the CW as you think through m&a, scenarios or is that sort of something that you can continue to do organically as you've been doing, uh, since you got control of the CW.
Um, and my and my second 1 is, do you mind? I I think you you've indicated on the last call that you don't feel like
You need all of these rules to be followed.
Uh, solidified before you might announce a transaction and do you mind just elaborating on what what ends up happening?
Um, if you have a transaction that's announced and let's say a broadcaster or a PTV firm, you know, challenges whatever. Um,
The FCC decides in court like how how do how do that seems very complicated to me?
So anything you can add would be helpful.
Sure, as it relates to the, uh the you know, the the rules and regulations as promulgated currently by the FCC. I mean there are waiver processes in place to, uh, you know, to get the waiver to own 2 of the top 4, rated stations in a Marketplace. So sure. And perhaps what I was referring to that,
Rule doesn't have to change for those kinds of transactions to happen and you see some folks, uh, you know, have proposed transactions like that that will go through the regular court process. I think it's important to understand that the FCC has a regulatory process when you file an application and then it gets put on public, notice people can comment and then their reply comments and and the FCC will do its work and so that all takes time and I think what, you know what, I was referring to is other things can happen during that time as well, for example, that the FCC could choose to, uh, rule on this. Refresh the record proceeding and and uh, uh, uh, could could choose to based on the 8th, circuit ruling choose to make changes or at least, you know, develop a, a proceeding that could lead to changes in the in-market regulation. So nothing happens in a vacuum and you know, any transaction we propose would provide uh, you know regulatory
uh,
uh, uh, remedies under the current rules, but realizing those rules could change in some of those former regulations could become moot during the pendency of a transaction. So, uh, you know, I think that all of that would have to be taken into account by the parties and the counterparties, uh, before going down that road, but we think it's entirely possible that, uh, 2 things can happen at the same time.
That makes sense.
Another CWO. Is that a strategic priority?
Uh well listen. It's a, it is a um,
Is it is not the number 1 strategic priority, but it is certainly, you know, something we look at when when looking at transactions, and if, if that is a, a byproduct, you know, it, it tends to benefit the company more than 1 way.
That's great. Thank you.
Thank you. Our next question comes from the line of Stephen Khal with Wells Fargo. Please proceed with your question.
Thank you. Um, so on the CW uh you know you talked about I think 40% of the time is now uh aired on with with sports. Um I was wondering what additional Sports opportunities. You see out there, um, in terms of leagues or parts of leagues uh, that you think it continued to to grow that. Assuming that, that is, in fact the the strategy of the CW to, to continue to add more Sports as a as a percentage. Um, and then the second question, I was just wondering if you could go a little bit deeper on the ad market, so it sounds like things are performing about as expected, maybe even, um, a little bit better. I was wondering if you could talk about, maybe how much digital is growing. Um, and then any Trends between what you're seeing at local stations versus your your National Revenue, which I think is a little bit bigger for you than it is for a lot of your peers. Thanks.
I will speak to the second part of that question, Stephen. And then asked Michael to speak to the first part, but, uh, the the bright spot in our ad support in the second quarter, was at the national network level. Um, and, you know, part of that is news Nation, being the number 1, basic, cable network for year-over-year growth, uh, in the month of, you know, as of the month in June and the CW moving into the eighth ranked Network in terms of total audience for the first half of 2025. So dollars are following the eyeballs which are leading to increase Revenue at the uh, at our national networks business. So that that certainly is a positive performing better than our uh, internal expectations, uh, in the quarter and and certainly here today. And Michael, I'll turn it over to you to respond, more to the sports question.
Yeah, it's a good segue. I mean, part of what we're seeing in the performance of the CW is driven, by the addition of sports. We now have, you know, a little bit of a track record under our belt. Certainly the advertising Community is responding to the consistent ratings that we've delivered. I talked about in my uh, opening remarks uh, the consistent performance year on year that we've seen particularly at at uh Xfinity. I think we're 20 plus races into the year. We've seen you know consistent, you know, week after week growth, certainly the industry is responding to it. If you look at Motorsports as a whole uh the industry is starting to talk about the Xfinity performance and particularly the smart decision that NASCAR made to invest its rights with the CW for the long term. So I think in terms of looking forward, um, yeah, there are other opportunities.
Out there and we absolutely are interested in pursuing them. I think if you look broadly at categories college sports, is 1 that we're interested in. Certainly has some success with the ACC and the Pack 12, uh, we have ongoing discussions with, uh, some others in that space right now. But nothing I can announce today.
Great. Thank you. Thank you.
Thank you. Our next question comes from the line of Benjamin's off with Deutsche Bank. Please proceed with your question.
Good morning, thanks for the question. I wanted to first ask about virtual MVPs, it sounds like this is 1 area. The FCC could look into. So, can you remind us where the economics for these Services stand? Today, compared to the traditional ecosystem, and what's your level of optimism? These rules could get changed. And then there's some new sports Centric streaming services launching soon. I'm curious if you think these products might impact uh the broader pay TV ecosystem or not. Thank you.
Maybe I'll just start with, just on the, on the economics. In terms of, I think your question was just around the VMV PDS versus the MVPs. Those are really, you know, sort of the same same, no change in terms of what we've been talking about. Historically, there are obviously, uh, MVPs. We, we have the ability to negotiate directly so we get paid on a growth basis. The virtual MVP is, uh, we are, uh, we work through the the networks and we get paid on a net basis and, you know, we're, um, you know, looking to kind of grow, uh, both revenue streams.
Over time as we, um, you know, as we renegotiate these contracts, um, I'll turn it to Mike to talk about some of the stuff that was launched recently or is going to be launched.
Holistic. And and that fact is, is pretty clear in the pricing of each which is uh, respectful of their wholesale pricing with pay TV Distributors um specifically at, you know, at fifty dollars combined for Fox and ESPN. Most folks would agree that pay TV is an attractive alternative given the relatively modest incremental cost for a significantly more robust set of program programming, uh, especially Sports. And by the way, a good chunk of that incremental programming is owned by Disney, who will have a broad slate of networks? Not available through SPN. Right Disney Network FX Nat Geo. For instance. Fox's product will be a little different in that regard but they've been clear about their intentions. Repeatedly saying that their product is narrowly targeted at the cordless cordless audience.
Further, uh, both of bundled these products with their pay TV deals, making them an added feature for pay TV subs and that model goes back to the Disney Charter deal in the fall of 23. And at the time you may recall we were on record uh, that we believe that would ultimately be a good thing for the health and viability of pay TV uh including our business. And as I mentioned, in my prepared, remarks Charters, pursuit of that model, seems to be proving that out. Uh, in the in the positive video, uh, sub trends that we've seen.
Um, incidentally, I see Disney's deal with the NFL as a further investment in pay TV, given that they did not acquire ownership of or the digital rights to Red Zone.
Which remained with the league. So I think all the value from Red Zone for Disney will be derived from distributing it together with the balance of their linear portfolio inside pay TV.
and finally, I want to add that we hope Fox, you know, is successful in targeting the cordless audience because the 24/7 feeds of our Fox stations
Uh the largest group of fox Affiliates will be included in Fox 1 and subscribers with that product and all of our Fox markets will enjoy Fox. Just as Pacey pay TV subscribers due today, that is via our stations.
It's helpful. Thank you, both.
Sure.
Thank you. Our next question comes from the line of Craig Huber, with Huber research Partners, please proceed with your question.
Uh, great. Thank you. Uh, Perry, I want to ask you, if you could, what are your updated thoughts on the business environment, the economic environment here in the U.S.? How are you feeling about that right now? Say, uh, where your head was at coming into this calendar year. And then, Lyanna, I do want to ask you just some housekeeping questions. This—maybe I missed this, but what were the CW losses in the quarter? Were they materially different than I think you had about $41 million loss a year ago? And do you still think you're on track?
To FCW losses for the year down about 25%. Thanks both of you.
Maybe I'll just take that 1 that 1 first we did uh and Mike's comments. He did talk about the
Quarter were better by about 21 million dollars. Uh, we do, um, still expect to, um, improve the total losses by about 25% over the course of the year and Achieve profitability sometime in 26.
I would say Craig in terms of the add environment, um, in terms of our forecasts for the year, in our internal budgeting and metrics, I think it's performing, uh, about as expected. Uh, there are puts and takes as you can imagine as we look at our forward Pace. Uh, you know, we're we're pleased at at, at, at the forecast and we we certainly don't see any, uh,
Denigration in our, in our forward-looking Pace, numbers versus what we've delivered in the first half of the Year. Obviously, the back half of the year has a lot more political Revenue impact, which means more crowd out, which means more inventory available back for General market advertising. So that's, you know, something we experience in the backup of every odd year. But, um, but at this point, you know, we we have, you know, things things are unfolding. We think pretty much as expected and, uh, everybody keeps waiting to for, you know, the, the shoe to drop. Uh, and quite frankly, we we haven't seen it. We think that, you know, the, the ad
Trends in the economy, uh, are are what they are and uh, I think terrifying may lead to uncertainty but it hasn't led to a freezing up of people's either spending or intentions to spend and I take all of that at at this point in time as a net positive.
Thank you. Our next question comes from the line of Alan gold with loop capital markets. Please proceed with your question.
I think there are reply comments, and then what has to happen next before the FCC could make some changes. Thank you.
I mean, maybe I'll just take the first.
On digital, you know, digital continues to be, you know, an area of uh, Focus for us in an area of of strength. In terms of of growth. We're we're seeing that growth overall, um, kind of in the mid mid single digits and then um at a higher rate at our uh, local business.
um,
so that's digital in the refresh preceding. Obviously our comments, we feel stand for themselves. Um, you know, uh, I think in terms of every everything else that I've read thus far, and I haven't read all of them. Uh, you know, I, I think everybody's pretty much talking their own book. I I was, I, I won't say, I was shocked to see that the pay TV. Uh, industry is, uh, is uh, uh, not does not want to see the national ownership cap go away. Uh, that's been their predictable response to any deregulation in our space uh, for quite some time now. So, um, I think at this point, the comment period has ended there'll be a reply comment. Uh, deadline later this month. I believe it's August 22nd. Uh, and that at that point, it will go under advisement to the chairman and his staff and uh, and others at the commission and and and we'll see what what comes of it after that point. Uh, uh, but I certainly think that, you know, the chairman initiating the refresh
Proceeding indicates, he feels there are lots of rules on the books, some of which have nothing to do with us, some of us some some things have to do with uh, Telegraph regulations that are still on the books. And I think that his goal is to eliminate uh, unnecessary regulation, whether it affects the telegraph industry or the broadcast industry. And we, we applaud that effort to do that and we want to participate, you know, be our comments and suggestions uh as part of that process. But uh, you know, as to the timing of an outcome, I I really can't predict that that is up to the chairman and and his staff.
Okay, thank you, Perry.
Thank you. Our next question comes from the line of Patrick Shaw, with bington research, please proceed with your question.
Hi. Uh, I just had a couple more questions just on the, on the ad Market. Um, just as you've been adding, uh, Sports Programming to the CW, could you just talk about like where your ad rates, uh, stand relative to some of your broadcast peers that you're getting, you know, much higher up in in terms of like the the viewership level for CW?
Yeah, sure. I think we, we have a pretty good handle on the marketplace for like, to, like programming. So we know when what, uh, Xfinity NASCAR rates were last year, uh, we feel good about that. We've actually seen pretty sizable growth, uh, in rates, uh, year on year. So both volume, and and rates. Um, same with, uh, with the college sports. Um, so we, you know, each category sort of has its own Marketplace. Um, we have a pretty good handle on that, as I said, and and we feel we're, we're doing, uh, you know, on par or better, uh, really in in each case,
Okay, and then and this is just on the terms of like the broader add market and I guess you address this a little bit. But could you just maybe talk about like just within the the categories, how that if there's been any sort of adjustment in how they've been shifting their spending between Q2 and Q3 just, I know you provided like the overall trajectory for, or your overall pacing for Q3 just kind of a little bit more detail on some of the Dynamics there.
Yeah, I would, I would say, you know, not from a category perspective, there's not a whole, heck of a lot of difference in terms of what we, in terms of the categories that are up and the categories that are down, you know, we continue to see strength in, um, you know, attorneys and home repair and Manufacturing. Those continue to be um, you know, good good, uh, good performers for us. And then on the negative side, you know, we continue to see auto uh, be, you know, be a problem area for us. Um,
On on that on that end. So you know, I think um, there's not like a, you know, there's various things that come in and come out but like nothing worth noting.
Okay, thank you.
Thank you. Our final question this morning comes from the line of Kadier Rishi with Rishi Capital Group. Please proceed with your question.
Good morning. Uh, thanks for taking my question. I, I just had a quick 1, uh, given the potential for the opportunities on the
For leadership transition.
Got you? Are you, are you? Uh, are you speaking about me?
Yeah, yeah. I'm just seeing it.
uh, if if uh you know the the the attractiveness of of of any kind of consolidation uh has led you to rethink
Um, you know, your planned your your planned retirement.
Oh, all right. I I have no plans to retire. I, you know I'm not going anywhere anytime soon. Okay. Um, uh, you know, and, and, and typically, you know, in terms of any announcement regarding an employment agreement, you know that that that comes, you know, toward the end of the current employment agreement and, you know, they're, you know, quite quite honestly are a lot of uh, things going on here right now and uh and and you know that that's not at the top of the list uh yet. But uh but I I don't think you have to worry too much about uh uh my engagement here. Being the third largest shareholder. I am very engaged every day all day and uh have a vested interest in the outcome of everything we do.
Okay, great. Now I appreciate that. I must have misunderstood, um, you know, some comments from a, a a, a call about a year ago. Thank you for that.
Thank you, ladies and gentlemen. This concludes our question-and-answer session. I'll turn the floor back to Mr. Sook. Any final comments?
Uh, thank you very much for the operator. Uh, and thank you all for joining us here today. Um,
we appreciate your time and we look forward to reporting on our third quarter results. Uh, in in early November, uh, and with that, we will, uh, we will bid you a good day and we will ask you all to disconnect. Thank you very much. Bye. Now,
Thank you. This conclusive is conference call. You may disconnect your lines at this time.