Q2 2025 Gray Media Inc Earnings Call
Key pad at any time during the call again Thats star one to join the question queue.
And without further Ado I will now turn the call over to chairman and CEO Hilton Howell.
Thank you so much Chris we really do appreciate it good morning, everyone.
This is Hilton Howell, the chairman and CEO of <unk> media and I want to thank all of you for joining our second quarter 2025 earnings call. We have a lot to talk about today with me here in Atlanta, our all of our executive officers, Pat <unk>, our president and co CEO Sandy <unk>, our Chief operating officer, Kevin <unk>, our chief legal and develop.
Speaker #4: Now we're back at the same on that morning, lady. And gentlemen, welcome to the GRAY MEDIA Q2 2025 GTN earnings release. If you ow you'd like to ask a estion, you may press star one on your telephone keypad at any time during the call.
<unk> officer, and Jeff <unk>, our Chief Financial Officer, and as usual, we will begin the disclaimer that Kevin will provide Kevin.
Speaker #4: Again, that's star one to join the question queue. And without further ado, I will now turn the call over to Chairman and CEO Hilton Howell.
Hello, and good morning, everyone.
Today, we filed with the SEC on form 8-K, our earnings release and an updated.
Investor slides later today, we will file with the SEC, our quarterly report on Form 10-Q.
Speaker #5: Thank you so much, Chris. We really do appreciate it. Good morning, everyone. This is Hilton Howell, the Chairman and CEO of Gray Media, and I want to thank all of you for joining our second quarter 2025 earnings call.
Materials are all available on our website, which is www gray media Dot com.
Included on the call may be discussion of non-GAAP financial measures and in particular, adjusted EBITDA leverage ratio denominator and certain leverage ratios. These.
Speaker #5: We have a lot to talk about today. With me here in Atlanta are all of our executive officers. Pat LaPlatney, our president and co-CEO; Sandy Breland, our chief operating officer; Kevin Latek, our chief legal and development officer; and Jeff Gignac, our chief financial officer.
These metrics are not meant to replace GAAP measurements, but are provided as supplements to assist the public in its analysis and valuation of our company for.
For the discussion and reconciliations of the company's non-GAAP financial measures to comparable GAAP measures can be found on our website I.
Speaker #5: And as usual, we will begin with a disclaimer that Kevin will provide. Kevin?
Speaker #6: Hi. Thank you, Hilton. Good morning, everyone. today, we follow the SEC on Form 8K, our earnings release, and an updated, investor slides later today.
All statements and comments made by management during this conference call other than statements of historical facts should be deemed forward looking statements.
These forward looking statements are subject to a number of risks and uncertainties actual results in the future could differ from those described in the forward looking statements as a result of various important factors that are contained in our most recent filings with the SEC. We undertake no obligation to update or revise any forward looking statements, whether as a result of new information future events or.
Speaker #6: We will follow the SEC, our quarterly report on Form 10Q. The materials are all available on our website, which is www.graymedia.com. Included on the call may be a discussion of non-GAAP financial measures and, particular, adjusted EBITDA leverage ratio denominator and certain leverage ratios.
Otherwise now return the call to Hilton Thank you Kevin.
Speaker #6: These metrics are not meant to replace GAAP measurements but are provided as supplements to assist the public in its analysis and valuation of ur company.
They were very happy to announce that our results for the second quarter of 2025 finished better than our original guidance on both revenues and expenses and in line with our revised guidance announced on July eight 2025 total revenue in the second quarter was $772 million a decrease of <unk>.
Speaker #6: Further discussions and reconciliations of the company's non-GAAP financial measures to comparable GAAP measures can be found on our website. All statements and comments made by management during this conference call, other than statements of historical fact, should be deemed forward-looking statements.
Speaker #6: 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 filings with the SEC.
7% from the second quarter of 2024, and 1% above the high end of our original guidance for the quarter total operating expenses before depreciation amortization amortization impairment and gain on disposal of assets in the quarter were slightly below the low end of our original guidance.
Speaker #6: We undertake no obligation to update or revise any forward-looking statements, whether it is as a result of new information in future events or otherwise.
Speaker #6: Now I return the call to Hilton.
We had a net loss of $56 million in the second quarter compared to net income of $22 million in the second quarter of 2024, adjusted EBITDA was $169 million in the second quarter, a decrease of 25% from the second quarter of 2020 for political ads.
Speaker #5: Thank you, Kevin. Today, we are very happy to announce that our results for the second quarter 2025 finished better than our original guidance on both revenues and expenses and in line with our revised guidance announced on July the 8th, 2025.
Speaker #5: Total revenue in the second quarter was $772 million, a decrease of 7% from the second quarter of 2024, and 1% above the high end of our original guidance for the quarter.
<unk> was obviously lower than the second quarter of 2024, yet similar to the first quarter. This year second quarter 2025, political finished well above our expectation for an off cycle year. In addition to these results we have been very active on the M&A front than in the past.
Speaker #5: Total operating expenses before depreciation and amortization impairment and gain on disposal of assets in the quarter were slightly below the low end of our original guidance.
<unk> weeks, if you recall that we reopened the TV industry M&A market in the spring when we obtained an FCC waiver to acquire the Fox affiliate in Rochester, Minnesota and created a duopoly with our NBC station. There in July we announced a first of its con five market.
Speaker #5: We had a net loss of $56 million in the second quarter, compared to net income of $22 million in the second quarter of 2024.
Speaker #5: Adjusted EBITDA was $169 million in the second quarter, a decrease of 25% from the second quarter of 2024. Political advertising was obviously lower in the second quarter of 2024, yet similar to the first quarter this year, second quarter 2025 political finished well above our expectation for an off-cycle year.
No cash swap of assets with scripts that transaction will bring us into the Lafayette, Louisiana market and include a Fox affiliate in Lansing, Michigan, where we currently own the NBC affiliate.
Our decision to sell our television stations in Colorado Springs Grand Junction in Twin Falls, Idaho was a very difficult. One we're excited that Graham scripts found a path that improves our respective strategic positions and creates more opportunities for the stations in.
Speaker #5: In addition to these results, we have been very active on the M&A front in the past several weeks. If you recall, we reopened the TV industry M&A market in the spring when we obtained an FCC waiver to acquire the Fox affiliate in Rochester, Minnesota, and created a duopoly with our NBC station there.
Spot markets with their new respective owners last Thursday, we announced the acquisition, but to shared services stations from Sagamore Hill broadcasting for less than $2 million and then on Friday, we announced the acquisitions of all block communications television stations.
Speaker #5: In July, we announced a first-of-its-kind five-market no-cash swap with assets with scripts. That transaction will bring us into the Lafayette, iana, market and include a Fox Affiliate in Lansing, Michigan, where we currently own the NBC affiliate.
Which are located in Louisville, Kentucky, Springfield, Decatur, Illinois, and Lima, Ohio for $80 million.
Speaker #5: While our decision to sell our TV stations in Colorado Springs, Grand Junction, and Twin Falls, Idaho, was a very difficult one, we are excited that Gray and Scripps found a path that improves our respective strategic positions and creates more opportunities for the stations in these five markets with their new respective owners.
And finally this morning early we announced an agreement to acquire TV stations, and 10 markets from Allan media $171 million, including the three new markets of Columbus, Tupelo, Mississippi, Terre Haute, Indiana, and West Lafayette, Indiana. So today.
Speaker #5: Last Thursday, we announced the acquisition of two shared services stations from Sagamore Hill Broadcasting for less than $2 million. And then on Friday, we announced the acquisitions of all block communications television stations which are located in Louisville, Kentucky, Springfield, Decatur, Illinois, and Lima, Ohio, for $80 million.
Hey, everyone on the calls please be nice to Kevin.
Up all night last night and has had no sleep. So he has on a wrap up on his answers to get Heather the scrip Sagamore block and Alan transactions.
A net six new markets to our portfolio through our portfolio. We are particularly proud that we will enter each of these markets. The local news station that was ranked number one in their respective markets. In 2020 for these transactions also will create and I'm really impressed with us 11.
Speaker #5: And finally, this morning early, we announced an agreement to acquire television stations in 10 markets from Allen Media for $171 million. Including the three new markets of Columbus, Tupelo, Mississippi, Terre Haute, Indiana, and West Lafayette, Indiana.
New Big four full powered Duopolies and all of these markets, we expect our leverage of our new sales and sport strategy strategies for the benefits of their local communities and for the public interest.
Speaker #5: So today, everyone, on the calls, please be nice to Kevin. He's been up all night last night and has had no sleep, so he has an errata on his answers.
Each of these transactions also furthers our commitment to pursuing tuck in and duopoly, creating transactions in a prudent matter.
Speaker #5: So together, the Scripps Sagamore Block and Allen transactions will add a net six new markets to our portfolio. We are particularly proud that we will enter each of these markets the local news station that was ranking number one in their respective markets in 2024.
When told across all four transactions, we will be adding strong assets that will be immediately cash flow accretive and therefore will contribute to our efforts to improve and enhance our company's balance sheet.
Speaker #5: These transactions also will create - and I'm really impressed with this - 11 new Big Four full-powered duopolies. In all of these markets, we expect our leverage of our new sales and sports strategies for the benefits of their local communities and for the public interest.
We have had a busy few weeks, putting together these transactions and we're not likely to continue at this pace in the next quarter or two instead, we will focus the balance of this year strategic energy on obtaining the necessary regulatory and other approvals to ensure prompt closings.
Speaker #5: Each of these transactions also furthers our commitment to pursuing tuck-in and duopoly-creating transactions in a prudent manner. When told across all four transactions, we will be adding strong assets that will be immediately cash-flow-accretive and therefore will contribute to our efforts to improve and enhance our company's balance sheet.
As announced transactions as well as working to ensure smooth transitions for the affected employees advertisers and other stakeholders all by the end of 2025.
We also made significant progress on strengthening our balance sheet during the second quarter of this year and into the third quarter of this year during the second quarter, we reduced our outstanding indebtedness by an additional $22 million. We finished the second quarter with a first lien leverage ratio of two.
Speaker #5: We have had a busy few weeks putting together these transactions, and we are not likely to continue at this pace in the next quarter or two.
Speaker #5: Instead, we will focus the balance of this year's strategic energy on obtaining the necessary regulatory and other approvals to ensure prompt closings of these announced transactions, as well as working to ensure smooth transitions for the affected employees, advertisers, and other stakeholders, all by the end of 2025.
Nine nine times and our leverage ratio of five six times each as defined by our senior credit agreement.
In July of 2025, we completed an offering of $900 million.
Our senior secured second lien notes, along with the $50 million increase in our revolver commitment, which now stands at $750 million the exceptional demand from the second lien transaction allowed us to also extend.
Speaker #5: We also made significant progress on strengthening our balance sheet during the second quarter of this year and into the third quarter of this year.
$775 million first lien debt issuance, Jeff will provide more details on each of these transactions later in the call.
Speaker #5: During the second quarter, we reduced our outstanding indebtedness by an additional $22 million dollars. We finished the second quarter with the first lean leverage ratio of 2.99 times and a leverage ratio of 5.6 times, each as defined by our senior credit agreement.
Like to simply say, thank you to our investors who are supporting us as we continue executing on our deleveraging and growth strategies as noted in our press release. This morning, our board of directors declared the usual <unk> <unk> per share quarterly dividends as always our board will consider capped.
Speaker #5: In July of 2025, we completed an offering of $900 million dollars as senior secured second lean notes along with a $50 million dollar increase in our revolver commitment, which now stands at $750 million.
Allocation each quarter in light of other opportunities to deploy capital for growth.
Speaker #5: The exceptional demand from the second lean transaction allowed us to also extend a $775 million dollar first lean debt issuance. Jeff will provide more details on each of these transactions later in the call.
Operationally, we continue to enhance our local content offerings in the second quarter of 2025, we now have local and regional professional sports deals covering nearly 80% of all of our markets our stations and our people.
Speaker #5: I'd like to simply say thank you to our investors, who are supporting us as we continue executing on our deleveraging and growth strategies. As noted in our press release this morning, our board of directors declared the usual eight cents per share quarterly dividends.
<unk> to receive national recognition for their outstanding journalistic efforts.
We are incredibly proud of our combined 81 regional or Murrow Awards for excellence in journalism 238 of our television stations I'm also exceptionally proud of kw, TX in my hometown of Waco, Texas.
Speaker #5: As always, our board will consider capital allocation each quarter in light of other opportunities to deploy capital for growth. Operationally, we continue to enhance our local content offerings in the second quarter of 2025.
Spearheading a companywide partnership with Graham media on a campaign to raise money.
The Texas floods in Kerrville, Texas that campaign raised over $1 1 million.
Speaker #5: We now have local and regional professional sports deals covering nearly 80% of all of our markets. Our stations and our people continue to receive national recognition for their outstanding journalistic efforts.
Once again, demonstrating the power of broadcast and our company's commitment to serving local communities.
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We announced that we had renewed our affiliation agreement with CBS for two more years as part of that agreement W. F. Our primary television station in Atlanta will become an independent television station. There are numerous examples of very successful independent television stations across.
Speaker #5: We are incredibly proud of our combined 81 regional Edward R. Murrow Awards for Excellence in Journalism, awarded to 38 of our television stations. I'm exceptionally proud of KWTX and my hometown of Waco, Texas, for spearheading a company-wide partnership with Graham Media on a campaign to raise money for the Texas floods in Kerrville, Texas.
The country and indeed within our own company, which includes K TV key K TDK.
In Phoenix, Arizona is family, which is the number one station in the market and across the state of Arizona.
Speaker #5: That campaign raised over $1.1 million dollars once again demonstrating the power of broadcast and our company's commitment to serving local communities. In June, we announced that we had renewed our affiliation agreement with CBS for two more years.
We are excited for WNS to officially make the transition next week and our community should be excited to see their Braves, the Hawks, and the dream and all of our expanded local offerings that are uniquely Atlanta.
Speaker #5: As part of that agreement, WANF, our primary television station in Atlanta, will become an independent television station. There are numerous examples of very successful independent television stations across the country and, indeed, within our own company.
The momentum at Assembly Studios also continued in the second quarter of this year the CBS daytime soap opera beyond the gates, which we discussed on our last call was extended for a second season, and we will continue to contribute to the activity onsite at assembly. We are actively engaged with potential development.
Speaker #5: Which includes KTVK in Phoenix, Arizona's Family, which is the number one station in the market and across the state of Arizona. We are excited for WANF to officially make the transition next week and our community should be excited to see their braves, the Hawks, and the Dream and all of our expanded local offerings that are uniquely Atlanta.
Partners, who are contributing or would be contributing their financial resources and development expertise to accelerate value creation at Assembly studios, we expect to have more announcements about these exciting plans later in 2025, we have made a lot of progress. So far this year and are excited that we are capped.
<unk> on opportunities opportunities across multiple aspects of our business to enhance shareholder value at this time I'll turn the call over to Pat to address our operations.
Speaker #5: The momentum at Assembly Studios also continued in the second quarter of this year. The CBS Daytime Soap Opera, Beyond the Gates, which we discussed on our last call, was extended for a second season and will continue to contribute to the activity on-site at Assembly.
As you saw in our July guidance update we finished the quarter at the better end of both our revenue and expense guidance, let me provide a little more context about how the quarter played out Q2, starting with the same cautious tone amongst our advertisers that we experienced in first quarter, particularly in the auto category.
Speaker #5: We are actively engaged with potential development partners who are contributing or would be contributing their financial resources and development expertise to accelerate value creation at Assembly Studios.
Speaker #5: We expect to have more announcements about these exciting plans later in 2025. We have made a lot of progress so far this year and are excited that we are capitalizing on opportunities across multiple aspects of our business to enhance shareholder value.
Third through the quarter, we saw a stronger core activity that we projected back in May and we ultimately finished on the high side of guidance down about 3% versus second quarter of 2004 from.
From a category perspective like in first quarter and as we guided for second quarter automotive came in down high single digits legal continues to grow nicely up double digit percentages versus last year.
Speaker #5: At this time, I'll turn the call over to Pat to address our operations.
Speaker #7: Thank you, Hilton. As you saw in our July 8th guidance update, we finished the quarter at the better end of both our revenue and expense guidance.
As a top five category.
Other categories are a mixed bag in some cases surprisingly resilient rest.
Restaurants were soft, but discount department stores tourism and the attainment all linked to consumer discretionary spending were up over 5% versus last year more.
Speaker #7: Let me provide a little more context about how the quarter played out. Q2 started with the same cautious tone amongst our advertisers that we experienced in the first quarter, particularly in the auto category.
More central categories like health home improvement education, and financial services were flattish.
Speaker #7: Through the quarter, we saw stronger core activity than we projected back in May, and we ultimately finished on the high side of guidance, down about 3% versus the second quarter of '24.
Digital is up again nicely at 8% and our new local direct business grew a little over 2% in the second quarter of 'twenty five.
Speaker #7: From a category perspective, like in the first quarter and as we guide you for the second quarter, automotive came in down high single digits.
Our multi media sales teams continued partnered with Arbitragers to bring new businesses to our trusted local platforms.
Speaker #7: Legal continues to grow nicely, up double-digit percentages versus last year, and is a top five category. Other categories are a mixed bag, in some cases surprisingly resilient.
Once again political AD revenue as Hilton <unk> ahead of our expectations in the second quarter of 'twenty five.
Our guide for the second quarter was about two to 3 million Bucks. While actual results came in at $9 million. Most of this revenue was generated from issue advertisers supporting the President's legislative priorities, but we saw spending from the Arizona Governor's race as well as the Georgia Senate state races in Virginia.
Speaker #7: Restaurants were soft, but discount and department stores tourism and entertainment all linked to consumer discretionary spending were up over 5% versus last year. More essential categories like health, home improvement, education and cial services were flash.
Providing guidance for the third quarter of 25 continues to be challenging we are guided quarter core AD revenue to be down low to mid single digits supported to remember however that the Olympics on NBC provided about $20 million uplift in July and August of 'twenty, four of which about $4 million was political.
Speaker #7: Digital was up again nicely at 8%, and our new local direct business grew a little over 2% in the second quarter of '25. Our multimedia sales teams continued to partner with advertisers to bring new businesses to our trusted local platforms.
Speaker #7: Once in, political ad revenue is. Hilton said it was ahead of our expectations in the second quarter of 2025. Our guide for the second quarter was about $2 to $3 million, while our actual results came in at $9 million.
If you factor that in our third quarter guidance flat to slightly up for us the categories in third quarter, we're seeing automotive and also a restaurant space and lower.
Speaker #7: Most of this revenue is generated from issue advertisers supporting the president's legislative priorities, but we saw spending from the Arizona governor's race as well as the Georgia Senate and state races in Virginia.
And we're also seeing some pockets of strength still in legal consumer goods and entertainment.
We expect digital revenue to be up low double digits in Q3 with a continuation of political spending.
Jeff will now address the key financial developments for the quarter. Thanks, Matt mentioned earlier, reducing leverage remains our top capital allocation priority and we remain focused during the second quarter. We continued to chip away at our debt by repaying additional $22 million in the second quarter of 2025.
Speaker #7: Providing guidance for the third quarter of '25 continues to be challenging. We are guiding third quarter core ad revenue to be down low to mid-single digits.
Speaker #7: Supporter remember, however, that the Olympics on NBC provided about a $20 million uplift in July and August of '24, of which about $4 million was political.
Our total capital markets debt reduction since the beginning of 2000 $24 million to $560 million are expense reductions that we've been discussing on our prior call. Prior calls are showing up in our results and supporting the other side of the equation, notably our operating expenses were flat in the second quarter of <unk> 25 versus the second quarter of 2020.
Speaker #7: De facto that in, our third quarter guidance flat to slightly up. Across the categories in third quarter, we're seeing automotive and also restaurants facing lower.
Speaker #7: And 're also seeing some pockets of strength, still in legal consumer goods and ertainment. We expect digital revenue to be up low double digits in Q3, with a continuation of political spending.
Four.
That follows a decline in the first quarter versus first quarter of 2004.
Speaker #7: Jeff will now address the key financial developments of the quarter.
We finished the quarter at $2 99 times first lien leverage and five six times total leverage each using the calculation in our senior credit agreement.
Speaker #8: Thanks, Pat. As Hilton mentioned earlier, reducing debt and leverage remains our top capital allocation priority. And we remain focused during the second quarter. We continue to chip away at our debt by repaying an itional $22 million in the second quarter of 2025.
On our first quarter call, we raised the possibility of M&A, providing another avenue to reduce leverage and enhance our ability to serve our markets.
Speaker #8: This brings our total capital markets debt reduction since the beginning of 2024 to $560 million. Our expense reductions that we've been discussing on our prior prior calls are showing up in our results and supporting the other side of the equation.
As we described our guiding principles on the M&A front focused on finding delevering transactions that are strategically important <unk> create duopolies to strengthen our local market presence.
Speaker #8: Notably, our operating expenses were flat in the second quarter of '25 versus the second quarter 2024. And that follows a decline in the first quarter versus the first quarter of 24.
Indeed, our transactions with Scripps Sagamore Hill block.
One will be immediately accretive to cash flow and through our leverage ratio. When we closed later this year, we estimate that if we close these transactions today, our leverage ratio would be approximately a quarter turn lower than where we finished the quarter.
Speaker #8: We finished the quarter at $2.99 times first lean leverage and $5.6 times total leverage, each using the calculation in our senior credit agreement. On our first quarter call, we raised the possibility of M&A, providing another avenue to reduce leverage and enhance our ability to serve our markets.
We're continuing to make progress on our net retransmission and moving towards sustainability on that front.
This is a function of a multiyear effort that continues.
Speaker #8: As we described, our guiding principles on the M&A front focused on finding de-levering transactions that are strategically important and/or create duopolies to strengthen our local market presence.
Continue to work with our network partners to find mutually beneficial arrangements.
In July strong market conditions allowed us to access the debt market twice as.
As we evaluated our options it became clear that raising some junior capital could accomplish a number of a number of objectives.
Speaker #8: Indeed, our transactions with Scripps Sagamore Hill Block and Allen will be immediately accretive to cash flow and to our leverage ratio when we close later this year.
We also wanted to set the stage to refinance our first lien debt after 2026 political cash flows.
Speaker #8: We estimate that if we close these transactions today, our leverage ratio would be approximately a quarter turn lower than where we finished the quarter. We're continuing to make progress on our net retransmission and moving towards sustainability on that front.
We ended up raising $900 million of 95 basis.
Senior secured second lien notes due 2032 and.
And we can currently increased our revolver by $50 million to $750 million.
And then also extended our revolver maturity to December one 2028.
Speaker #8: This is a function of a multi-year effort that continues. We continue to work with our network partners to find mutually beneficial arrangements. In July, strong market conditions allowed us to access the debt market twice.
The new second lien layer in our capital structure fully repaid our 2027 notes and reduced first lien leveraged by repaying $403 million of our term loan off.
Speaker #8: As we evaluated our options, it became clear that raising some junior capital could accomplish a number of a number of objectives. We also wanted to set the stage to refinance our first lean debt after 2026 political cash flows.
Given the strong reception to the second lien we quickly followed with an issuance of $775 million of southern in a quarter percent first lien notes that lowered our cost of debt and extended our maturities out to 2033.
As a result of these actions we have no material maturities until December 2028.
Speaker #8: We ended up raising $900 million of 9 and 5/8 senior secured second lean notes due 2032, and we can currently increase our revolver by $50 million to $750 million and also extended our revolver maturity to December 1st, 2028.
And we have a clear path to address our remaining 28 and 29 first lien maturities.
We completed the transactions with less than a 25 basis point increase in our overall cost of debt and Youll see that reflected in our updated interest guide importantly, we also have access to balance sheet and internally generated capital to reduce debt and to pursue delevering M&A.
Speaker #8: The new second lean layer in our capital structure fully repaid our 2027 notes and reduced first lean leverage by repaying $430 million of our term loan F.
Taking into account the July refinancings, we estimate that our first lien leverage decreased from $2 99 to two six times, our secured leverage increased from $2 99 to approximately three six times and our total leverage did not changed other than from the impact of the transaction costs.
Speaker #8: Given the strong reception to the second lean, we quickly followed with an issuance of $775 million of seven and a quarter percent first lean notes that lowered our cost of debt and extended our maturities out to 2033.
Speaker #8: As a result of these actions, we have no material maturities until December 2028, and we have a clear path to address our remaining 28 and 29 first lean maturities.
One last thing I'll note. The one big Beautiful Bill Act allows for greater interest deductibility. As a result, you will see that we lowered our tax guidance for the year and we no longer expect to make any material tax payments for the remainder of 2025.
Speaker #8: We completed the transactions with less than a 25 basis point increase in our overall cost of debt and you'll see that reflected in our updated interest guide.
Speaker #8: Importantly, we also have access to balance sheet and internally generated capital to reduce debt and to pursue deleveraging M&A. Taking into account the July refinancings, we estimate that our first lean leverage decreased from 2.99 to 2.6 times, our secured leverage increased from 2.99 to approximately 3.6 times, and our total leverage did not change other than from the impact of the transaction costs.
This concludes my remarks, and I'll turn the call back.
Thank you so much and operator, we'd love to open up the line for any questions you guys may have.
Ladies and gentlemen at this time, please press star one on your telephone keypad. If you would like to ask a question that is star one on your telephone keypad.
First step we have Dan <unk> of the benchmark company.
Speaker #8: One last thing I'll note, the one big beautiful bill act allows for greater interest deductibility. As a result, you will see that we lowered our tax guidance for the year and we no longer expect to make any material tax payments for the remainder of 2025.
Yeah. Thanks, good morning.
A lot of ground to cover I appreciate all the color guys.
I guess first I'll, just say just a shout out to Jeff heroic job with the balance sheet, so well done on that front.
Speaker #8: This concludes my remarks, and I'll turn the call back to Hilton. Thank you so much, Jeff. And operator would love to open up the line for any questions you guys may have.
Thanks, Dan second.
Second I'll say I'll ask Hilton I guess.
Just kind of standing Pat does it mean.
I assume you will continue to look at swaps and other things that could improve obviously you have a lot to digest after what you've done, but just kind of where your head, but if an opportunity arises and Jeff I know you gave the color on leverage improvement post transaction, but just any way to think about synergies or.
Speaker #9: All right, ladies and gentlemen, at this time, please press star one on your telephone keypad. If you would like to ask a question, that is star one on your telephone keypad.
Speaker #9: First up, we have Dan Kernos of the Benchmark Company.
Our buyers multiples on some of these.
Speaker #10: Yeah. Thanks. Good morning. A of ground to cover. Appreciate all the color guides. I guess, well, first, I'll just say just a shout-out to Jeff, heroic job with the balance sheet.
Question five well.
Well then let me let me just again first thank you.
Your comments with regard to our balance sheet. It really was in fact below it and I'm really proud of jetson, yet for leading that and our whole team for that effort.
Speaker #10: So well done on that front.
Speaker #8: Thanks, Dan.
Speaker #10: Second, I'll say I'll ask Hilton, I guess, you ow kind of standing Pat, does it mean you know I assume you'll continue to look at swaps and other things that could improve?
With regard to the transactions that we've announced really since the announcement that I covered in my comments and Rochester, Minnesota, We've done a lot of transactions I think everybody that has spoken in the industry will tell you that everybody is talking to everybody else.
Speaker #10: Obviously, you have a lot to digest after what you've done, but just kind of you know where your head's at if an opportunity arises?
Speaker #10: And Jeff, I know you gave the color on leverage improvement post-transaction, but just any way to think synergies or you ow or buyers' multiples on some of these?
And while we don't have any current plans on other transactions, we're always going to be listening, Dan I mean, but I do know that sandy by here, who is also with US is going to have it as a big look we've got a lot of markets here.
Speaker #11: Thanks, Pat.
Speaker #8: Well, Dan, let me just begin. First, thank you. On your comments with regard to our balance sheet, it really was, in fact, heroic and I'm really proud of Jeff Gignac for leading that and our whole team for that effort.
The first thing that you have to do when you run any kind of business is make sure, but you're bitten off can be handled.
Im very very excited and I want to publicly say.
Speaker #8: With regard to the transactions that we have announced, really since the announcement that I've covered in my comments, in Rochester, Minnesota, you know we've done a lot of transactions.
The entire management team at Scripps because it's hard for any two companies who are all justifiably proud of their assets and their and their operations to be able to reach an amicable swap and we did so and I'm immensely proud of it and so.
Speaker #8: I think everybody that has spoken in the industry will tell you that everybody's talking to everybody else. And while we 't have any current plans on other transactions, you know we're always going to be listening, Dan.
Speaker #8: I am, but I do know that Sandy, here, who's also with us, is going to have it's a big look. We got a lot of markets here.
It's going to be very good for scripts, it's also going to be very good with gray.
Because really when we announced that we had a duopoly in Lansing, but now with the acquisition through scripts and what we have announced this morning with Alan we get a second duopoly out of that transaction and Lafayette, Louisiana, but we also get new duopolies in lots of markets and as as Jeff mentioned.
Speaker #8: And the first thing that you have to do when you're on any kind of business is make sure what you've bitten can be handled.
Speaker #8: I am very, very excited. And I want publicly thank the entire management team at Scripps because it's hard for any two companies who are all justifiably proud of their assets and their operations to be able to reach an amicable swap.
And if all of these deals were done just the transactions themselves de levers by about a quarter point and that is just the transactions. We have done a tremendous number of other initiatives, that's going to be reducing our debt on a on a ratio basis push back.
Speaker #8: And we did so and I'm immensely proud of it. And so it's going to be very good for Scripps; it's also going to be very good with Gray.
<unk> so with regard to other deals yes, sure we're going to talk about them, but right now we've got a big job ahead of us and we have to get these deals approved by the FCC I don't see in Kevin's a better one to answer this question, but I don't see any.
Speaker #8: Because really, when we announced it, we had a duopoly in Lansing. But now, with the acquisition through Scripps and what we have announced this morning with Allen, we get a second duopoly out of that transaction in Lafayette, Louisiana.
Speaker #8: But we also get new duopolies in lots of markets. As Jeff mentioned, if all these deals were done just the transactions themselves, they deleveraged by about a quarter point. And that is just the transactions. We have done a tremendous number of other initiatives that are going to be reducing our debt on a ratio basis prospectively.
<unk>.
Hurdles to getting every one of them done and so for all of these are just a handful about six I think new net up increase in markets.
We are really excited to welcome them to our portfolio.
But to see our increase in our local markets and as you know grey media is known for its content.
Speaker #8: So, you know, with regard to other deals, yeah, sure, we're going to talk about them. But, right, we've got a big job ahead of us.
Recognition.
With 81 Edward R. Murrow Awards is remarkable and we're going to be able to increase local news increased new local sports and increase new exciting content in each and every one of those markets.
Speaker #8: And we have to get these deals approved by the FCC, I don't see, and Kevin's a better one to answer this question, but I don't see any real hurdles to getting every one of them done.
Dan If I. This is Kevin I'll, just interject on the transactions.
Speaker #8: And so for all of these just a handful, about six, I ink, new net up increase in markets, we are really excited to welcome them to our portfolio.
Everyone's talking about.
One is really busy with transactions, but Grays announced five this year four in the last four weeks.
Okay.
The Scripps deal as Hilton said as historic no one's ever done anything like what we did there.
Speaker #8: But to see our increased debt in our local markets, and as you know, Gray Media is known for its content. The recognition of, you know, with 81 Edward R.
Allan Media transaction announced a couple of hours ago, the bond transaction required a tremendous amount of time as you can imagine negotiate put together.
And we have a lot of work to do to get through all the approvals and then.
Speaker #8: The Murrow Awards are remarkable. We are going to be able to increase local news, increase new local sports, and increase new exciting content in each and every one of those markets.
As he mentioned we are essentially 17 new.
Markets in Duopolies to plan for and integrate and that is where our focus is that so while we're not saying we're not looking at anything.
Speaker #8: Dan, this is Kevin. I just want to interject on the actions. Everyone's talking about how busy everyone is with transactions, but Gray has announced five this year.
Hilton's precise comments, where our focus is going to be on.
Executing the transactions that we have announced not chasing another four or five or six transactions over the next couple of months.
Speaker #8: Four in the last four weeks. They the Scripps deals, Hilton said, is historic. No one's ever done anything like what we did there. The Allen Media transaction announced a couple of ours ago.
So that comment that you asked about cash flow, we're not commenting we don't comment on multiples and cash flows.
Speaker #8: The Block transaction required a tremendous amount of time to, as you can imagine, negotiate and put together. And we have a lot of work to do to get through all the approvals and then, as you ioned, we have essentially 17 new markets and duopolies to plan for and integrate and that is where our ocus is at.
I think we've been pretty clear for couple of <unk>.
Now that we were going to pursue transactions only when they were deleveraging and.
That's exactly what we've done here.
Okay.
I mentioned when I joined the company a couple of them.
A number of years ago.
Speaker #8: So while we're not saying we're not looking at thing, Hilton's precise comments were our focus is going to be on executing the transactions that we have announced, not chasing another four or five or six transactions over the next couple of months.
Great.
<unk> more highly leveraged than it is today.
We part of how we got out of that was we started doing some transactions that were delevering we did.
Instead of it.
Little one and progressively got larger and those transactions were done at multiples that were.
Speaker #8: So that's a comment you asked about cash flow. We're not commenting. We don't comment on multiples and cash flows. I think we've been pretty clear for a couple of calls now that we were going to ursue transactions only when they were deleveraging.
Lower than our leverage ratio and we grew our way out of.
Our leverage ratio through a couple of measures.
Transactions were really key to getting that done and so we're kind of repeating that playbook here, but just to emphasize we do not anticipate another several transactions over the next several months because our focus is going to be on <unk>.
Speaker #8: And that's exactly what we've done here. I'll mention you know when I joined the company a uple a number of years ago, Gray was was more highly leveraged it is today.
These over the finish line and getting them integrated closed get the money into a bank accounts get a peek at these people into our.
Speaker #8: And we part of how we got out of that was we started doing some transactions that were deleveraging, right? We did we started a little one and then we progressively got larger.
Working with us get the news expanded.
The other strategies that we've talked about.
Thank you Dan.
Speaker #8: And those transactions were done at multiples that were lower than our leverage ratio. And we grew our way out of our leverage ratio. We're a couple of measures of those transactions were really key to getting that done.
All right next up we have Steven Cahill.
<unk> Fargo.
Yes. Thank you just wanted to dig a bit more in the M&A as well so.
I was wondering if you could break the quarter turn improving leverage down to.
Speaker #8: And so we're kind of repeating that playbook here. But just to emphasize, we do not anticipate another several transactions over the next several months because our focus is going to be on getting these over the finish line and getting them integrated, closed, get the money into their bank accounts, get these people into our working with us, get the news expanded and the other strategies that we've ked .
To help us understand maybe what the.
Net cash out is and what the EBITDA contribution is.
And should we think of that as inclusive of synergies or is that prior to I'm sure. What are some really significant synergies that you'll be able to drive through.
Yeah, Stephen so.
Speaker #8: Thank you, Dan.
We really we don't want to comment beyond the quarter turn reduction in our total leverage ratio inclusive of funding and synergies.
Speaker #9: All right. Next up, we have Steven Cahill of Wells Fargo.
Speaker #12: Yeah. Thank ou. Just wanted to dig a bit more in the M&A as well. So Jeff, I was wondering if you could break the quarter-turn improving leverage down.
Okay got it and then just on the Q3 guide.
So I know you went through a change in the way WNS is going to receive certain fees and expenses with at CBS affiliation. So I was just trying to understand if that had a meaningful impact on the Retrans revenue guide for Q3, and overall EBITDA as well for Q3, which I think is quite a bit below where.
Speaker #12: To help us understand maybe what the net cash out is and what the EBITDA contribution is, and should we think that as inclusive of synergies or is that prior to? I'm sure there are some really significant synergies that you'll be able to drive through?
You were in Q3 2023.
Speaker #8: Yeah. Steven, we so we really we don't want to comment beyond the quarter-turn reduction in our total leverage ratio. Inclusive of funding and synergies.
Yes so.
The short answer to your question is yes, the P&L, we're not going to get into the details on exactly what the numbers are around what any one station.
Obviously, everybody is investing in the whole company the P&L at.
Speaker #12: Okay. Got it. And then just on the Q3 guide, you know so I know you went through a change in the way WANF is going to receive certain fees and expenses with its CBS affiliation.
Just generically speaking the P&L at WNS will shift much more in favor of advertising. So there so.
Piece of the Retrans revenue side is a reduction in the rates that we will get at WNS.
Speaker #12: So I was just trying to stand if that had a aningful impact on the retrans revenue guide for Q3 and overall EBITDA as well for Q3, which I think is quite a bit below where you were in Q3 2023.
You can you can see what we can.
Our guide incorporates what we see today on both sides of that inclusive of everything that we know as of today.
Speaker #8: Yeah. So the short answer to your question is yes. The P&L, we're not going to get into the details on exactly what the numbers are around any one station.
And let me just add something to that and color is kind of important if you don't mind.
With regards to WNS, we hosted our board of directors meeting there yesterday it had been planned for.
Speaker #8: Obviously, everybody's investing in the whole company. The P&L at just generically speaking, the P&L at WANF will shift much more in favor of advertising.
For some time it couldn't have gone better, but one thing that we did we utilized.
Two weeks ago.
And with studios and had a full many Atlanta based upfront.
Speaker #8: So, a piece of the retrans revenue side is a reduction in the rates that we'll get at WANF. You can see what our guide incorporates, which includes what we see today on both sides of that, inclusive of everything that we know as of today.
And we had more than 300 guests that attended it could not have gone better and we expect to have a candidly a very robust sort of advertising opportunity not just with the local community, but also for the political community. We've got a lot of political race.
Speaker #8: And Steven, let me add something because I think color is kind of important if you don't mind. With regard to WANF, we hosted our board of directors meeting there yesterday.
That'll be coming up in 2026, we're going to have a tremendous amount of local news local sports local entertainment and content, that's really good and honestly, it's what a lot of folks want to watch and so we're actually very excited about Atlanta, our commitment to the city and the state of Georgia.
Speaker #8: It had been planned. For some time, it couldn't have gone better. But one thing that we did, we utilized Assembly Studios about two weeks ago.
Speaker #8: And had a full mini-Atlanta-based upfront. And we had more than 300 guests that attended. It could not have gone better. And we expect to have a, you know, a very robust sort of advertising opportunity.
I think that's going to be amazing, what we do as an independent here in the city.
Next up we have Craig Huber Huber research partners.
Speaker #8: Not just with the local community, but also for the political community. You know, we've got a lot of political races that will be coming up in 2026.
Good morning. Thank you My first question would just start with the Cvs Atlantis stations have can you just.
Talk about what happened there exactly why that why the switch this obviously rarely happens in the industry.
Speaker #8: We're going to have a tremendous amount of local news, local sports, local entertainment and content that's really good. And honestly, it's what a lot of folks want to watch.
The foundation has not renewed what can you comment there. Please.
Speaker #8: And so we're actually very excited about Atlanta, our commitment to the city and the state of Georgia. I think it's going to be amazing what we do as an independent here in the city.
Craig This is Kevin.
In the mid 1990, Cvs and Paramount came together.
Paramount had a station groups of independent stations.
Cvs had.
Those affiliated with the Cvs network in all of those markets other than a small handful.
Speaker #9: All right. Next up, we have Craig Huber of Huber Research Partners.
The only market in the United States, where a network own a television station non affiliated with their network with Atlanta, Seattle and Tampa.
Speaker #13: Good morning. Thank you. My first question will just start with this CBS Atlanta station. So can you just talk about what happened there exactly?
Simply CBS.
Speaker #13: I mean, why the switch? Maybe this obviously rarely happens in the industry when an affiliation is not renewed. What can you comment there, Ace?
Expect at least as long as I've been in the industry, which is going on three decades, we have unexpected at CBS would have a strong interest in moving its affiliation to those independent stations at some point in time.
Speaker #14: Craig, this is Kevin. In the mid-1990s, CBS and Paramount came together. Paramount had a station group of independent stations. CBS had O&Os, affiliated with the CBS network, and all of those markets other than a small handful.
Gray acquired Meredith, we knew that was a strong possibility that CBS.
The affiliation to the independent at some point in time.
When we closed on the station we made significant investments we've talked about in prior calls and press releases, we changed the call letters to align our news first W. Anr.
Speaker #14: The only markets in the United States where a network owned a TV station not affiliated with their network was Atlanta, Seattle, and Tampa. And that's simply CBS.
We made at our.
Everything about that station was outlining news first it's not about anything else is about Atlanta news first we added dozens of reporters tons of hours of local news tremendous amount of additional resources.
Speaker #14: We have expected, at least as long as I've been in the industry, which is going on three decades, that CBS would have a strong interest in moving its affiliation to those independent stations at some point in time.
And it showed in the REIT. So chosen research shows in the ratings it shows in the station sales.
At some point that station was going to stand on its own as an independent.
Speaker #14: When Gray acquired Meredith, we knew that it was a strong possibility that CBS would move the affiliation to the independent at some point in time.
With the Super Bowl coming to Atlanta in February 2027, it seems likely to us that CBS is going to multi affiliation back under independent station at some point prior to the Super Bowl and therefore, probably prior to 2026 NFL.
Speaker #14: When we closed on the station, we made significant investments. We've talked about in prior calls and press releases. We changed the call letters to align a news first, WANF.
Speaker #14: We made that our everything about that station was align a news first. It's not about anything else. It's about align a news first. We added dozens of reporters, tons of hours of local news, tremendous amounts of additional resources.
Season, so as we were negotiating with Cvs this time around.
The opportunity came up to take our station independent at this time, we felt very good about with the station has done what it has accomplished.
Having gone from three regional Emmy nominations, the yearly bought it to I think they had 30, some odd last year and a one a national award and about 131.
Speaker #14: And it showed in the research shows the ratings. It shows in station sales. At some point, that station was going stand on its own as an independent.
Resisting nuomi if over 50, and we have the list of awards was on and on and that's not just awards.
Speaker #14: With the Super Bowl coming to Atlanta in February 2027, it seems likely to us that CBS is going to want the affiliation back under the independent station at some point prior to the Super Bowl.
Recognizing journalism it shows up in every other measure that station. We felt very good. This was the right time to take the station to an independent not doing a political year, but this year. So we worked out a transaction and it worked out a excuse me worked Eddie.
Speaker #14: And therefore, probably prior to the 2026 NFL season. So as we were negotiating with CBS, this time around, the opportunity came up to take our station independent at this time.
Transition with Cvs and wish our station will stand on its own. This month. So that's the back story. This is something that started in <unk>.
Speaker #14: We felt very good about what the station has done, what 's accomplished. Having gone from three regional ME nominations, the year we bought it, I think they had 30-some out last year, and they won a national award, and about nominated for over 50.
1990 days from Paramount and Cvs came together and so we've gotten like 50 phone calls, saying is this because of something that happened in may or June or July or the sky and steel or.
Speaker #14: I mean, we have the list of awards goes on and on, and that's not just awards recognizing journalism. It shows up in every other measure of that station.
<unk>.
Everyone. The Super Bowl It has nothing to do with what's happened in the last six months or last five years.
Speaker #14: We felt very good. This was the right time to take the station to an independent. Not during a political year, but this year. So we worked out a transaction or worked out a, excuse me, worked out a transition with CBS in which our station will stand on its own this month.
A situation that has existed since the mid 19 nineties and grace.
The challenge stepped up to the plate and got ready for what we're doing today, we could not be more.
Prepared and excited and ready for that station to be Atlantis News first in every metric and we expect it will be there in time.
Speaker #14: So that's the backstory. This is something that started in like 1990s when Paramount and CBS came together. And so we've gotten like 50 phone calls saying, "Is because of something that happened in May or June or July or the Skydance deal or the whoever won the Super Bowl?" It has nothing to do with what's happened in the last six months or last five years.
Let me just emphasize.
In a public fashion.
Still a very excited CBS affiliate group, we renewed in 52 markets.
We're friends with the management team this transition has gone well.
And we wish.
At the CBS Atlanta Channel 69.
Speaker #14: There is a situation that has existed since the mid-1990s, and Gray saw the challenge, stepped up to the plate, and got ready for what we are doing today.
All the best.
In the future.
We will be happy competitors with them and so there is no problem, there and I think that the.
Speaker #14: We could not be more prepared and excited and ready for that station to be Atlanta's news first in every metric. And we expect it will be there.
Broadcast affiliate relationship while always challenging we will still remain one of the great partnerships foam business.
Speaker #14: In time.
Speaker #8: And Craig, let me just emphasize in a public fashion, I mean, we still are a very excited CBS affiliate group. We renewed in 52 markets.
Ladies and gentlemen, just as a reminder, if you would like to ask a question you can press star one on your telephone keypad.
Speaker #8: And we're friends with the management team. This transition has gone well, and we wish at CBS Atlanta Channel 69 all the best in the future.
<unk> to join the question queue.
Next up we have Alan Gould.
Luke capital.
Thanks for taking the question I've got two please.
Speaker #8: And we will be happy competitors with them. So, there is no problem there. I think that the broadcast affiliate relationship, while always challenging, will still remain one of the great partnerships in business.
First Jeff congratulations on stretching out those extending those maturities. So after two more political cycles. If your pro forma debt is now five and three quarters times Levered right now.
<unk>.
Rough ballpark, how much do you think that can go down between now and the end of 'twenty eight with two more political cycle.
Speaker #9: All right, ladies and gentlemen. Just as a reminder, if you would like to ask a question, you can press *1 on your telephone keypad.
Without giving a specific number Alan we think it's going to go down a lot.
Speaker #9: That is star one to join the question queue. Next up, we have Alan Gould of Loop Capital.
Five six today.
There's been some pressure on the denominator, which.
Which we expect will not be as intense as we move forward given all the actions that we've taken.
Speaker #15: Thanks for taking the question. I've got two, please. First, Jeff, congratulations on stretching out those maturities till after two more political cycles.
And so if you look out pick your number for what cash flow you think we generate and the 26 and 28 political cycles.
Speaker #15: If our pro forma debt's now five and three-quarters times leverage right now, rough ballpark, how much do you think that can go down between now and the end of '28 with two more political cycles?
And.
We've been very clear not only through our words, but through our actions, what we're doing with capital allocation and paying down debt and when you have 10, 5%.
Speaker #11: Without giving a specific number, Alan, we think it's going to go down a lot. We're at five, six today. There's been some pressure on the denominator.
Debt in your capital structure Theres, a pretty good return on repaying that as quickly as you can so.
The the second lien deal was designed to get us to and you can see in the investor deck that we published.
Speaker #11: Which will which we expect will not be as intense as we move forward given all the actions that we've taken. And so if you look out, you know, pick your number for what cash flow you think we generate in the '26 and '28 political cycles, and you ow we've been very clear not only through our words but through our actions, what we're doing with capital allocation, and paying down debt, and when you have 10 and a half percent debt in your capital structure, there's a pretty good return on repaying that as quickly as you can.
How we're thinking about the plan and the sequence going forward, we're trying to be very transparent about how we're tackling the delevering piece here.
It's capital allocation, but when we have the opportunities on the M&A side allocating some capital there is actually a good way to accelerate the deleveraging its immediate and then looking forward.
It gives us.
It gives us additional cash flow on an ongoing basis. So.
It's too soon to tell you where I think we ended 2028, but our longer term objectives, we've been clear about which is to drive to get back below four times.
Speaker #11: So the second lean deal was designed to get us to, and you can see in the investor deck that we published, how we're thinking about the plan and the sequence going forward.
We will have pretty significant benefit on the equity it will benefit our cost of debt.
Helpful in a lot of ways. So.
Speaker #11: We're trying to be very transparent about how we're tackling the deleveraging piece here. It's capital allocation, but when we have the opportunities on the M&A side, allocating some capital there, is actually a good way to accelerate the deleveraging.
All of this results and let me just share a little piece of history and I'm not to start a date set yet, but I'm going to throw transactions when.
When we closed on the <unk> com transaction.
Speaker #11: It's immediate. And then looking forward, it gives us, it gives us additional cash flow on an ongoing basis. So it's too soon to tell you where I think we end 2028, but our longer-term objectives, we've been clear about, which is to drive to get back below four times which will have, you know, pretty significant benefit on the equity.
2019.
When the dates but I guess I am within 18 months, we worked because we levered up to close right. We got to 5556 with an 18 months, we were down to three five right now.
Now the world has changed but the biggest delta between that deal.
The Meredith transaction, which is really the last time that we added any kind of debt to our portfolio.
Speaker #11: It'll benefit our cost of debt. It's helpful in a lot of ways. So I'll.
Speaker #8: Alan, this is Hilton. Let me just share a little piece of history, and I'm not going to throw dates at you, but I'm going to throw transactions at you.
<unk> has been the last four years with interest rates going up to battle. The inflation that was caused by a lot of excessive government spending.
Speaker #8: When we closed on the Raycon transaction in 2019, more or less, I said I wouldn't date it, but I guess I am. Within 18 months, we went because we levered up to close Raycon.
Now in a interest rate I hope I believe it's going to be.
Decreasing environment we.
<unk> balanced out and so I just would put out to you the rates on transaction as a historical antecedent to consider.
Speaker #8: We got to 5.5, 5.6. Within 18 months, we were down to 3.5. All right? Now, the world has changed, but the biggest delta between that deal and the Meredith transaction, which is really the last time that we added any kind of debt to our portfolio, has been the last four years with interest rates going up to battle the inflation that was caused by a lot of excessive government spending.
And it's definitely a Eli lapp of BMO.
Thanks.
Two part maybe following up on some prior questions, but I was wondering if.
If you think about acquisitions.
How does how does the size factor play and meaning.
Your goal is to Delever with these transactions does size play a decent role in that endeavor and then also cannot can we can you give us a bit of a timetable for when the synergies get leveraged to that lower two five times that you're outlining.
Speaker #8: We're now in an interest rate, and I hope, I believe it's going to be a decreasing environment. You know, we have since balanced out. And so I just would put out to you the Raycon transaction as a historical antecedent to consider.
While this result, and I think that those those decreases in leverage happened almost upon closing.
Speaker #9: All right. Next up, we have Eli Lapp of BMO.
Speaker #12: Oh, thanks. Sort of a two-part. Maybe following up on some prior questions. But I was wondering, if you think about acquisitions, how does the size factor play in?
And so it could be very very rapidly with regard to when those are realized.
Now with regards to realized day one.
I'm, sorry, I'm sorry, Eli.
Speaker #12: Meaning, your goal is to delever with these transactions. Does size play a decent role in that endeavor? And then also, can we can you give us a bit of a timetable for when the synergies get leveraged to that lower 0.25 times that you're lining?
Yes, yes.
Yes look there is some there is some short implementation period, but they are realized fairly quickly. After we closed those transactions so that piece of it.
It will start to come in it will start to come into the run rate of the actual cash generation of the business fairly quickly after close.
Speaker #8: Well, this is Hilton. I think that those those decreases in leverage happen almost upon closing. And so it could be very, very rapidly with regard to when those are realized.
With regard to the size of the transaction I don't think we can comment on anything specific we look at what's available that's out there that makes sense for us and.
You can see what we've done the I'd say the beauty of creating Duopolies in these markets for most of the transactions that we're talking about most of the stations that were acquiring.
Speaker #11: Yeah. And Alan, with regard to.
Speaker #8: You're realized day one. Sorry.
Speaker #11: Go ahead.
Speaker #8: I'm sorry.
Speaker #11: Eli. So yeah, that yeah, there's look, there is some there is some short implementation period, but they're realized fairly quickly. After we close those transactions.
The beauty of those is that they are less risky in terms of integration implementation et cetera.
They fit together, we already know the markets we have people in a lot of those by definition in those markets. So.
Speaker #11: So that piece of it, you know, it'll start to come in it'll start to come into the the run rate of the actual cash generation of the business fairly quickly after close.
For US. This was this was a really elegant opportunity to go ahead and add.
Speaker #11: With regard to the size of the transaction, I don't think we can comment on anything specific. We look at what's available out there that makes sense for us.
And additional heft in market that really accomplishes exactly what we want to do which is to be the news leader in our markets and serve our communities and our advertiser clients. So it's.
Speaker #11: And you know, you can see what we've done. The I'd say the beauty of creating duopolies in these markets for most of the transactions that we're talking , or most of the stations that we're quiring, the beauty of those is that they are less risky in terms integration, implementation, etc.
And we'll see what we'll see what else comes along but we've got a lot to digest right now and.
I think we're pretty happy with what we've announced.
<unk>.
But I can't predict the future entirely in terms of what else comes along and it could make sense.
Speaker #11: They they fit together. We already know the markets. We have people in a lot of those in by definition in those markets. So you know, for us, this was this was a really elegant opportunity to go ahead and add additional heft in market that really accomplishes exactly what we want to do, which is to be the news leader in our markets and serve our communities.
That answers your question well I'll just add one other thing too I mean, we all expect to see significant changes in the regulatory environment, but at some point.
<unk> transactions are going to depend upon what happens.
With the FCC, the Doj and the regulatory environment. So it's kind of tough to say are we going to do some huge deal or we want to put our companies together with another company or anything else because we need to see the parameters of what the world looks like from a regulatory standpoint.
Speaker #11: And our advertiser clients. So it's we'll see what we'll see what else comes along. But we've got a lot to digest right . And you know, I think we're etty happy with what we've announced.
Before we can do anything one way or another and so we're kind of in a wait and see things on bidders lines.
Speaker #11: But I can't predict the future entirely in terms of what else comes along and could make sense. So I hope that answers your question.
Speaker #8: Well, you know, I'll just add one other thing too. I mean, we all expect to see significant changes in the regulatory environment. But at some point, you know, bigger transactions are going to depend upon what happens with the FCC, the DOJ, and the regulatory environment.
Alright next definitely had Avi Steiner at J P. Morgan.
Thank you good morning, I've got a couple of questions.
First one if I missed this I apologize I recognize that everyone is talking to everyone, but I am curious if the two groups of TV assets, you just bought from block and Allen media, where those competitive auctions or did the sellers approach you because of maybe particular benefits grey brings to the table and then I've got a couple more thank you.
Speaker #8: So it's kind of tough to say, "All right, well, we want to do some huge deal," or, "We want to put our companies together with another company," or anything else because we need to see the parameters of what the world looks like from a regulatory standpoint.
Yes.
With time constraints and the number of callers were taking one question per folks and I think we have you on our schedule for a call later today. So we can address the others later.
Speaker #8: Before we can do anything one way or other. And so we're kind in a wait-and-see things on bigger ings.
We're under NDA with our sellers, so we can't talk about their processes.
Speaker #9: All right. Next up, we have Avi Steiner of JPMorgan.
I would say that.
Look it's a small industry folks know each other.
Speaker #15: Thank you. Good morning. I've got a couple of estions. First, and if I missed this, I apologize. I recognize that everyone is talking to everyone, but I'm ious if the two groups of TV assets you just bought from Block and Allen Media, were those competitive auctions or did the sellers approach you because of maybe particular benefits Gray brings to the table?
On the box side.
We just have worked with block folks literally since I started in this industry in 1997, so I've known them for very long time.
And we all know.
Borrowing we've done a number of transactions with him in the past I've served with him on his CBS affiliate board for four years.
Speaker #15: And then I've got a couple of e. Thank you.
None from number of industry events. So its now like we need a broker to introduce us to people everybody knows everyone.
Speaker #8: Yeah, Avi, sorry. With time constraints and the number of callers, we're taking one question per person. I think we have you on the count on our schedule for a call later today, so we can address the others later.
Sometimes bankers are involved sometimes theyre not.
They're not with us on these transactions.
But whether people go to an auction process or hire bankers or just call us. It just depends on their situation and we can't really comment on their decisions.
Speaker #8: We're under NDAs with our sellers. So we can't talk about their processes. I would say that look, it's a small industry. Folks know each other.
Speaker #8: On the Block side, and I'm pleased to say I've worked with Block folks literally since I started in this industry in 1997. So I've known them for a y long time.
I will say that I think our relationships with.
With the Counterparties hearing which would include scripts.
To have a lot to do with how we got these transactions done.
Speaker #8: And we all know we know Byron. We've one a number of transactions with him in the past. I've served with him on the CBS affiliate board for four years.
It's.
Theres a lot of trust that's required here and a lot of history with folks makes these transactions go smoothly and putting them together and getting them closed and thats.
Speaker #8: We all know him from a number of industry events. So it's not like we need a broker to introduce us to people. Everybody knows everyone.
Really important to us.
Speaker #8: Sometimes bankers are involved. Sometimes they're not. I think they're not with us on these transactions. But whether people go to an auction process or hire bankers or just call us, it just depends on their situation.
We have and I think a call with you.
A little bit we can.
Patriotic questions at that time.
Okay.
Thank you Avi.
Yes. Thank you for the question.
And with that ladies and gentlemen, we do have time for one final question Gateway to Hamburger of Morgan Stanley. Your line is now open.
Speaker #8: And we 't really comment on their decisions. I would say that I think our relationships with the counterparties here, which would include Scripps have a lot to do with how we got these transactions done.
Alright, Thank you very much for taking my question.
Your guidance for the third quarter shows a sequential decline in retransmission consent revenue about $25 million and it shows a decline in network affiliate fees of about $19 million.
Speaker #8: It's a lot of trust that's required here. And a lot of history with folks makes these transactions go smoothly and putting them together and getting them closed.
Speaker #8: And that's really important to us. We have a, I think, a call with you in a little bit. We can hit your other questions at that time.
I don't think we've seen such a big kind of step function in sequential trends in those two.
Line items. It just has to do with the CBS affiliate change or is there something else that we should think about how should we think about that going forward as well.
Speaker #8: Thank you, Avi. Yes. Thank you the question.
Yeah. So so look.
Speaker #9: And with that, adies and gentlemen, we do have time for one final question. David Hamburger of Morgan Stanley, your line is now open.
There are definitely has an impact on WGN emphasis patent law flattened by the way.
But the change in.
Speaker #16: Hi. Thank you very much for taking the estion. You know, your guidance for the third quarter shows a sequential decline and retransmission consent revenue of 25 million.
The reverse payments the drop in reverse payments.
Is.
The result of a.
Multi year efforts to create a sustainable model and we feel like we're getting there.
Speaker #16: And it shows a decline in network affiliate fees of about 19 million. I don't think we've seen such a big kind of step function in sequential trends in those two line items.
That effort is ongoing.
Ed.
And look there's a lot of pieces to these network deals.
Obviously, the financial pieces, big but theres a lot of pieces and we're doing everything we can to find agreement that makes sense for not only us, but our network partners. So it's not just <unk> it's.
Speaker #16: It just has to do with the CBS affiliate change or is there something else that we should ink about and how should we think about that going forward as well?
Speaker #7: Yeah. So look, there are definitely an impact from WANF as a platinum, by the ay. But you know the change in you ow the reverse payments, the drop in reverse payments, is the result of a multi-year effort to create a sustainable model.
A lot of things.
Okay.
Well I think that's the last question and so in closing let me first thank everyone for.
For joining us this morning, and I want you all to be nice to folks. If you have calls scheduled later today because we literally finished off at dawn. This morning on the alloy transaction and literally everyone from our board of directors to everyone sitting around this table today has been involved in.
We're very excited I think these transactions are tremendously accretive, but it's even more than that they are immensely strategic theyre going to help us in terms of the growth of our sports portfolios, whether it's the pelicans out of New Orleans, or the Braves out of Atlanta across the board they expand what we can do.
And what we can deliver as a local broadcaster of note. We are very proud of our company and thank you for your support and your interest. This morning, we will talk to you guys next quarter.
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.