Q1 2026 The E.W. Scripps Co Earnings Call

May 8, 2026

Operator: Good day, and thank you for standing by. Welcome to the Q1 2026 The E.W. Scripps Company Earnings Conference Call. I would now like to hand the conference over to your first speaker today, Becca McCarter, Senior Director, External Communications. Please go ahead.

Speaker #1: After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press *11 on your telephone.

Speaker #1: You will then hear an automated message advising your hand is raised. To withdraw your question, please press *11 again. Please be advised that today's conference is being recorded.

Speaker #1: I would now like to hand the conference over to your first speaker today, Becca McCarter, Senior Director, External Communications. Please go ahead.

Speaker #2: Thank you, DeeDee, and good morning, everyone, and thank you for joining us for a discussion of the E.W. Scripps Co. financial results and business strategies.

Becca McCarter: Thank you, DeeDee, and good morning, everyone, and thank you for joining us for a discussion of The E.W. Scripps Company's financial results and business strategies. You can visit scripps.com for more information and a link to the replay of this call. A reminder that our conference call and webcast include forward-looking statements based on management's current outlook and actual results may differ materially. Factors that may cause them to differ are outlined in our SEC filings. We do not intend to update any forward-looking statements we make today. Included on this call will be a discussion of certain non-GAAP financial measures that are provided as supplements to assist management and the public in their analysis and valuation of the company. These metrics are not formulated in accordance with GAAP and are not meant to replace GAAP financial measures and may differ from other companies' uses or formulations.

Speaker #2: You can visit scripts.com for more information and a link to the replay of this call. A reminder that our conference call and webcast include forward-looking statements based on management's current outlook and actual results may differ materially.

Speaker #2: Factors that may cause them to differ are outlined in our SEC filings. We do not intend to update any forward-looking statements we make today.

Speaker #2: Included on this call will be a discussion of certain non-GAAP financial measures that are provided as supplements to assist management and the public in their analysis and valuation of the company.

Speaker #2: These metrics are not formulated in accordance with GAAP and are not meant to replace GAAP financial measures and may differ from other companies' uses or formulations.

Speaker #2: Reconciliations of these measures are included in our earnings release. We'll hear this morning from Chief Financial Officer Jason Combs and then SCRIPPS President and CEO Adam Simpson.

Becca McCarter: Reconciliations of these measures are included in our earnings release. We'll hear this morning from Chief Financial Officer Jason Combs and then Scripps President and CEO Adam Symson. Here's Jason.

Speaker #2: Here's Jason.

Speaker #3: Good morning, everyone, and thank you for joining us. We are coming into this morning's call with strong momentum and good news about our financial performance and other activity.

Jason Combs: Good morning, everyone, and thank you for joining us. We are coming into this morning's call with strong momentum and good news about our financial performance and other activity. Here are a few of the highlights. We are progressing rapidly on executing our comprehensive transformation strategy, which has helped drive significant improvement in our Q1 net leverage to under 4 times. Our local media division delivered a strong performance with industry-leading 7% core advertising revenue growth, driven by our unique live sports strategy. We launched the Scripps Sports Network, a premium free streaming channel. We are entering a midterm election cycle with strategic market exposure in key battleground states, and we continue to optimize our portfolio through strategic asset transactions, generating $123 million in gross proceeds from recent sales of 2 stations.

Speaker #3: Here are a few of the highlights. We are progressing rapidly on executing our comprehensive transformation strategy, which has helped drive significant improvement in our first-quarter net leverage to under four times.

Speaker #3: Our local media division delivered a strong performance with industry-leading 7% core advertising revenue growth, driven by our unique live sports strategy. We launched the SCRIPPS Sports Network, a premium free streaming channel.

Speaker #3: We are entering a midterm election cycle with strategic market exposure in key battleground states. And we continue to optimize our portfolio through strategic asset transactions, generating $123 million in gross proceeds from recent sales of two stations.

Speaker #3: We also continue to work towards the closing of our station swaps with Gray and pursue additional M&A activity to support debt reduction and enhanced operating performance.

Jason Combs: We also continue to work towards the closing of our station swaps with Gray and pursue additional M&A activity to support debt reduction and enhance operating performance. In addition to those recent highlights, we are pleased to have just successfully completed a new affiliation agreement with our largest network partner, ABC, covering 17 ABC affiliates. With that overview as a backdrop, I'd like to review our Q1 financial results, and then I'll discuss Q2 guidance, followed by details on our improving debt position. I'll conclude with a review of our EBITDA improvement plan. I will present our Q1 local media division results on a same station or adjusted combined basis, removing the Q1 2025 results of the 2 TV stations that we've now sold and reflecting our addition of the Lexington ABC affiliate.

Speaker #3: In addition to those recent highlights, we are pleased to have just successfully completed a new affiliation agreement with our largest network partner, ABC, covering 17 ABC affiliates.

Speaker #3: With that overview as a backdrop, I'd like to review our first-quarter financial results and then I'll discuss second-quarter guidance, followed by details on our improving debt position.

Speaker #3: I'll conclude with a review of our EBITDA improvement plan. I will present our first-quarter local media division results on a same-station or adjusted combined basis, removing the Q1 2025 results of the two TV stations that we've now sold and reflecting our addition of the Lexington ABC affiliate.

Speaker #3: During the first quarter, our local media division revenue was $331 million. Up 5.8% from first quarter 2025. Core advertising increased 7%. Our services, automotive, and gambling categories all grew in the quarter.

Jason Combs: During Q1, our local media division revenue was $331 million, up 5.8% from Q1 2025. Core advertising increased 7%. Our services, automotive, and gambling categories all grew in the quarter. Local core advertising year-over-year growth was largely driven by advertising sales tied to our National Hockey League telecast. We saw a strong contribution from the addition of our newest rights agreement with the Tampa Bay Lightning. Beyond this new partnership, we also saw strong growth in our existing NHL deals with the Vegas Golden Knights, the Utah Mammoth, and Florida Panthers. Our strategy is designed to drive year-over-year growth across both our existing deals and new partnerships. Last month, we announced a fifth full-season NHL sports rights agreement with the Nashville Predators to start this fall.

Speaker #3: Local core advertising year-over-year growth was largely driven by advertising sales tied to our national hockey league telecasts. We saw a strong contribution from the addition of our newest rights agreement with the Tampa Bay Lightning.

Speaker #3: And beyond this new partnership, we also saw strong growth in our existing NHL deals with the Vegas Golden Knights, the Utah Mammoth, and Florida Panthers.

Speaker #3: Our strategy is designed to drive year-over-year growth across both our existing deals and new partnerships. And last month, we announced a fifth full-season NHL sports rights agreement with the Nashville Predators to start this fall.

Speaker #3: The Winter Olympics and the Super Bowl also contributed to our Q1 core advertising growth. Political advertising revenue was nearly $9 million as we begin what's expected to be a record-breaking spending cycle for the midterm elections.

Jason Combs: The Winter Olympics and the Super Bowl also contributed to our Q1 core advertising growth. Political advertising revenue was nearly $9 million as we begin what's expected to be a record-breaking spending cycle for the midterm elections. This year, we forecast strong spending in our markets due to US Senate and gubernatorial races in Arizona, Colorado, Michigan, Nevada, Ohio, and Wisconsin. We also are watching growing competitive situations in Florida and in Montana. Local media distribution revenue increased 2%, again, on a same-station basis. Expenses for the division increased about 2.4% year over year. Excluding the impact of our expenses tied to our new NHL team deal, expenses were flat. Local media segment profit was $44 million compared to $32 million in Q1 2025. For Q2, we expect local media division revenue to be up low single digits.

Speaker #3: This year, we forecast strong spending in our markets due to U.S. Senate and gubernatorial races in Arizona, Colorado, Michigan, Nevada, Ohio, and Wisconsin. We also are watching growing competitive situations in Florida and in Montana.

Speaker #3: Local media distribution revenue increased 2%, again on a same-station basis. Expenses for the division increased about $2.4% year-over-year. Excluding the impact of our expenses tied to our new NHL team deal, expenses were flat.

Speaker #3: Local media segment profit was $44 million. Compared to $32 million in Q1 2025. For the second quarter, we expect local media division revenue to be up low single digits.

Speaker #3: We expect core advertising to be down low single digits, without the benefit of live sports for most of the quarter. We expect Q2 local media gross distribution revenue to be impacted by our impasse with Comcast, which ran from March 31 to May 5.

Jason Combs: We expect core advertising to be down low single digits without the benefit of live sports for most of the quarter. We expect Q2 local media gross distribution revenue to be impacted by our impasse with Comcast, which ran from 31 March to 5 May. Based on that timing, we still expect full-year gross distribution revenue to grow in the low single-digit range, but now expect net distribution revenue to grow in the low double-digit range, a slight change from our previous guidance. We expect Q2 local media expenses to be flat to Q2 of 2025. Let's review the Scripps Networks division Q1 results and Q2 guidance.

Speaker #3: Based on that timing, we still expect full-year gross distribution revenue to grow in the low single-digit range, but now expect net distribution revenue to grow in the low double-digit range, a slight change from our previous guidance.

Speaker #3: We expect second-quarter local media expenses to be flat to Q2 of 2025. Now let's review the SCRIPPS Network's division first-quarter results and second-quarter guidance.

Speaker #3: Once again, I'll be presenting the results on an adjusted combined basis. In this case, adjusting for the impact of the core TV sale. In the first quarter, SCRIPPS Network's revenue was $174 million.

Jason Combs: Once again, I'll be presenting the results on an adjusted combined basis, in this case, adjusting for the impact of the Court TV sale. In Q1, Scripps Networks revenue was $174 million, down 9.5% from Q1 2025. Connected TV revenue was up 26% from the same quarter last year. The division's expenses for the quarter were $126 million, up 1%. Scripps Networks segment profit was $47.5 million compared to $66.8 million in the year ago quarter. For Q2, we expect Scripps Networks division revenue to be down about 10%. The networks are facing a softer market from macroeconomic conditions impacting the direct response marketplace and external measurement pressure from or from recent Nielsen methodology changes.

Speaker #3: Down 9.5% from Q1 2025. Connected TV revenue was up 26% from the same quarter last year. The division's expenses for the quarter were $126 million, up 1%.

Speaker #3: SCRIPPS Network segment profit was $47.5 million. Compared to $66.8 million in the year-ago quarter. For the second quarter, we expect SCRIPPS Network's division revenue to be down about 10%.

Speaker #3: The networks are facing a softer market from macroeconomic conditions impacting the direct response marketplace and external measurement pressure from Nielsen due to recent Nielsen methodology changes.

Speaker #3: Adam will talk more about this in a moment. We expect Scripps Network's Q2 expenses to be up in the low single digits. Turning to the segment labeled Other, in the first quarter, we report a loss of $6 million.

Jason Combs: Adam Symson will talk more about this in a moment. We expect Scripps Networks Q2 expenses to be up in the low single digits. Turning to the segment labeled Other, in Q1, we reported a loss of $6 million. Shared services and corporate expenses were $26.6 million. For Q2, we again expect that line to be about $27 million. Higher medical claims and increased insurance premiums are causing that line to go higher than usual. For Q1, the company is reporting a loss of $0.20 per share. The loss included a $30 million gain on the sales of Court TV and two television stations, WFTX in Fort Myers, Florida, and WRTV in Indianapolis. These sale transactions decreased the loss attributable to shareholders by $0.25 per share.

Speaker #3: Shared services and corporate expenses were $26.6 million. For the second quarter, we again expect that line to be about $27 million. Higher medical claims and increased insurance premiums are causing that line to go higher than usual.

Speaker #3: For the first quarter, the company is reporting a loss of $0.20 per share. The loss included a $30 million gain on the sales of core TV and two television stations, WFTX in Fort Myers, Florida, and WRTV in Indianapolis.

Speaker #3: These sale transactions decreased the loss attributable to shareholders by 25 cents per share. In addition, the preferred stock dividend has a negative impact on earnings per share even when we don't pay it.

Jason Combs: In addition, the preferred stock dividend has a negative impact on earnings per share even when we don't pay it. This quarter, it reduced EPS by $0.18. We had $20 million outstanding on our revolving credit facility at the end of the quarter. On 30 April, we entered into an agreement to extend the 7 July 2027 maturity date of a revolving credit facility to 7 July 2029, with commitments of $200 million. For Q1, cash and cash equivalents totaled $84 million. Net debt was $2.2 billion, as defined in our credit agreement. Also during the quarter, we paid down $10.2 million on our B2 term loan. In addition, we paid down $20.4 million on our B3 term loan.

Speaker #3: This quarter, it reduced EPS by 18 cents. We had $20 million outstanding on our revolving credit facility at the end of the quarter. On April 30th, we entered into an agreement to extend the July 7th, 2027, maturity date of our revolving credit facility to July 7th, 2029, with commitments of $200 million.

Speaker #3: For the first quarter, cash and cash equivalents totaled $84 million. Net debt was $2.2 billion, as defined in our credit agreement. Also, during the quarter, we paid down $10.2 million on our V2 term loan.

Speaker #3: In addition, we paid down $20.4 million on our V3 term loan. Since the end of the quarter, we've paid down an additional $30 million on the V2 term loan, for a total of just over $60 million in term loan paydowns since the beginning of this year.

Jason Combs: Since the end of the Q, we've paid down an additional $30 million on the B-2 term loan for a total of just over $60 million in term loan pay down since the beginning of this year. Net leverage at the end of the Q was 3.9x per the calculations in our credit agreements, which include certain pro forma adjustments relating to our transformation efforts. As we announced in February, our company transformation plan includes growing enterprise EBITDA by $125 to $150 million. Our EBITDA improvement plan balances rightsizing our current expense structure with implementing new ways to grow revenue and profitability. You'll start to see the financial benefits of our plan in the H2 of this year.

Speaker #3: Net leverage at the end of the quarter was 3.9 times, per the calculations on our credit agreements, which includes certain pro forma adjustments relating to our transformation efforts.

Speaker #3: As we announced in February, our company transformation plan includes growing enterprise EBITDA by $125 to $150 million. Our EBITDA improvement plan balances right-sizing our current expense structure with implementing new ways to grow revenue and profitability.

Speaker #3: You'll start to see the financial benefits of our plan in the second half of this year. We expect total in-year EBITDA impact of 20 to 30 million dollars and an annualized run rate of about 75 million dollars as we move into next year.

Jason Combs: We expect total in-year EBITDA impact of $20 to 30 million and an annualized run rate of about $75 million as we move into next year. Now, here's Adam.

Speaker #3: And now, here's Adam.

Speaker #4: Thanks, Jason, and good morning, everybody. At SCRIPPS, we're in the midst of executing a significant transformation, moving now from the detailed planning stage into execution.

Adam Symson: Thanks, Jason. Good morning, everybody. At Scripps, we're in the midst of executing a significant transformation, moving now from the detailed planning stage into execution. I'm pleased to report that we're right on track. I like to say that this transformation is a refounding of the company, where we're bringing the values, ethics, and mission of our founder, Edward Willis Scripps, forward 150 years to set the company up in a way I'd like to think he would were he here today. I've been doing a lot of research on our founder. EW was fiercely protective of his newsroom's journalism and editorial independence. He was entirely committed to serving the people in the communities where he operated, and he was well known, maybe even notorious, for his dedication to operating with efficiency to ensure he would have the margin to carry out the mission.

Speaker #4: And I'm pleased to report that we're right on track. I like to say that this transformation is a refounding of the company, where we're bringing the values, ethics, and mission of our founder, Edward Willis SCRIPPS, forward 150 years to set the company up in a way I'd like to think he would where he here today.

Speaker #4: I've been doing a lot of research on our founder. E.W. was fiercely protective of his newsroom's journalism and editorial independence. He was entirely committed to serving the people and the communities where he operated.

Speaker #4: And he was well known, maybe even notorious, for his dedication to operating with efficiency, to ensure he would have the margin to carry out the mission.

Adam Symson: 150 years ago, EW focused on his consumers' problems and commercialized the solution. The assets that make up our company may be different today, but our transformation is grounded in the same customer-first focus. Here's an example of what this is looking like. In our newsrooms, we've already been changing the model. We're moving from a broadcast-centric operation that has historically served our audiences during defined time periods to news operations that leverage automation, AI, and technology to serve consumers when and where they expect to get their local news, especially as they've moved to streaming. Leveraging technology has allowed us to deepen our commitment to local news, getting more of our teams out of the newsroom, and into the community, putting more reporters in the field to live in the geographic areas where they cover. All of it in service to our vision, we create connection.

Speaker #4: 150 years ago, E.W. focused on his consumer's problems and commercialized the solution. The assets that make up our company may be different today, but our transformation is grounded in the same customer-first focus.

Speaker #4: Here's an example of what this is looking like. In our newsrooms, we've already been changing the model. We're moving from a broadcast-centric operation that has historically served our audiences during defined time periods to news operations that leverage automation, AI, and technology to serve consumers when and where they expect to get their local news.

Speaker #4: Especially as they've moved to streaming. Leveraging technology has allowed us to deepen our commitment to local news, getting more of our teams out of the newsroom and into the community, putting more reporters in the field to live in the geographic areas where they cover.

Speaker #4: All of it, in service to our vision: we create connection. This isn't incremental change. It's a complete realignment of our newsroom operations, our business models, and our culture around the opportunities we see clearly—streaming platforms, productivity-enabling technologies, and our unrivaled ability to create connection for the people and the businesses in the communities we serve.

Adam Symson: This isn't incremental change. It's a complete realignment of our newsroom operations, our business models, and our culture around the opportunities we see clearly. Streaming platforms, productivity-enabling technologies, and our unrivaled ability to create connection for the people and the businesses in the communities we serve. This is just one example at Scripps of how we are upending what needs to be changed, fueling the fire where we see the top-line growth, as we see in streaming, and going farther and faster with what's working well, like our sports strategy. Let's talk about sports. In local media, our live sports helped Scripps deliver an industry-leading core advertising performance in Q1, up 7%. As Jason said, this came from new partnerships and from the organic growth in every one of the markets where we're executing the strategy. We're far from done.

Speaker #4: This is just one example at SCRIPPS of how we are upending what needs to be changed. Fueling the fire where we see the top line growth, as we see in streaming, and going farther and faster with what's working well, like our sports strategy.

Speaker #4: Let's talk about sports. In local media, our live sports helped SCRIPPS deliver an industry-leading core advertising performance in the first quarter. Up 7%. As Jason said, this came from new partnerships and from the organic growth in every one of the markets where we're executing the strategy.

Speaker #4: And we are far from done. Just a few weeks ago, we announced the new full-season local broadcast agreement with the NHL's Nashville Predators. And I expect more core growth fueling opportunity to come.

Adam Symson: Just a few weeks ago, we announced the new full-season local broadcast agreement with the NHL's Nashville Predators, and I expect more core growth fueling opportunity to come. For the second quarter, the live sports action shifts to our Scripps Networks and the WNBA and the NWSL. The WNBA's preseason game between the Indiana Fever and the New York Liberty on 25 April was ION's most-watched preseason game ever. Tonight, the WNBA regular season tips off with a double header on ION, with tremendous excitement about the return of Caitlin Clark and this year's class of exceptionally talented draft picks. Scripps Sports will once again broadcast the most WNBA games of any network, bringing a WNBA double header every Friday night all season long to fans nationwide. Advertiser demand is high for women's basketball as well as for our full slate of women's sports.

Speaker #4: Now, for the second quarter, the live sports action shifts to our SCRIPPS networks and the WNBA and the NWSL. The WNBA's preseason game between the Indiana Fever and the New York Liberty on April 25th was ION's most-watched preseason game ever.

Speaker #4: Tonight, the WNBA regular season tips off with a doubleheader on ION, with tremendous excitement about the return of Caitlin Clark and this year's Class of Exceptionally Talented draft picks.

Speaker #4: SCRIPPS Sports will once again broadcast the most WNBA games of any network, bringing a WNBA doubleheader every Friday night all season long to fans nationwide.

Speaker #4: Advertiser demand is high for women's basketball, as well as for our full slate of women's sports. It's now clear that SCRIPPS is the leader in women's sports.

Adam Symson: It's now clear that Scripps is the leader in women's sports, showcasing women's athletic achievement with rights for the WNBA, NWSL professional soccer, PWHL hockey, MLV volleyball, Athlos track, college basketball, Pro Cheer, and our newest partner, PBR's Premier Women's Rodeo, which we'll be bringing to our networks, Grit and ION. We recognized early that Americans were embracing the quality and professionalism of women's sports, and we're pleased to have become the go-to platform for the brands that want to connect with fans. Next week, the Professional Women's Hockey League's Walter Cup finals will begin on ION. We're very pleased to bring this to national television for the first time and to have Amica serving as our presenting sponsor and Discover as an additional sponsor. They are just two of the hundreds of blue-chip advertisers we've brought onto our platform through our sports strategy.

Speaker #4: Showcasing women's athletic achievement with rights for the WNBA, NWSL professional soccer, PWHL hockey, MLV volleyball, Athlos track, college basketball, pro cheer, and our newest partner, PBR's Premier Women's Rodeo, which we'll be bringing to our networks grit and ION.

Speaker #4: We recognized early that Americans were embracing the quality and professionalism of women's sports and were pleased to have become the go-to platform for the brands that want to connect with fans.

Speaker #4: Next week, the professional women's hockey league's Walter Cup Finals will begin on ION. We're very pleased to bring this to national television for the first time and to have Amika, serving as our presenting sponsor, and Discover as an additional sponsor.

Speaker #4: They are just two of the hundreds of blue-chip advertisers we've brought onto our platform through our sports strategy. In March, to capitalize on the marketplace growth and our success in connected TV revenue, we launched the SCRIPPS Sports Network, a new streaming channel that leverages our existing sports rights, some efficiently acquired new rights, and sports-themed programming.

Adam Symson: In March, to capitalize on the marketplace growth and our success in connected TV revenue, we launched the Scripps Sports Network, a new streaming channel that leverages our existing sports rights, some efficiently acquired new rights, and sports-themed programming. We're streaming more than 100 live games a year along with original sports programming, documentaries, and talk shows. We've secured broad distribution across the major streaming platforms, including Roku, LG, and Samsung, making it easy for fans to find the sports, teams, and players they love. Connected TV continues to be a growth driver for Scripps, up 26% in the Q1, and I expect we'll continue to leverage our premium programming and live sports to make this a differentiator for us among our peers and competitors.

Speaker #4: We're streaming more than 100 live games a year along with original sports programming, documentaries, and talk shows. And we've secured broad distribution across the major streaming platforms, including Roku, LG, and Samsung, making it easy for fans to find the sports, teams, and players they love.

Speaker #4: Connected TV continues to be a growth driver for Scripps, up 26% in the first quarter. And I expect we'll continue to leverage our premium programming and live sports to make this a differentiator for us among our peers and competitors.

Speaker #4: While we expect to capitalize on live sports on ION in Q2, just as we have with our local division in Q1, we're navigating some external challenges with national advertising revenue.

Adam Symson: While we expect to capitalize on live sports on ION in Q2, just as we have with our local division in Q1, we're navigating some external challenges with national advertising revenue. As Jason mentioned, we're seeing some market softness due to the volatile economy. Networks' direct response ad spending, in particular, has been impacted as consumers feel the pain of higher prices, especially now at the pump. We've also been affected by a recent Nielsen audience measurement change that has artificially shifted household viewership weighting in favor of cable networks. Because all Scripps networks are distributed over-the-air, this change has negatively impacted audience delivery. Nielsen's new methodology is inexplicably resulting in frustratingly inaccurate reports of ratings declines for over-the-air viewing and streaming. This disproportionately impacts the measurement of our multicast networks viewers who are most vulnerable to affordability issues, including those in rural communities, people of color, and older Americans.

Speaker #4: As Jason mentioned, we're seeing some market softness due to the volatile economy. Networks direct response ad spending, in particular, has been impacted as consumers feel the pain of higher prices, especially now at the pump.

Speaker #4: We've also been affected by a recent Nielsen audience measurement change that has artificially shifted household viewership weighting in favor of cable networks. Because all SCRIPPS networks are distributed over the air, this change has negatively impacted audience delivery.

Speaker #4: Nielsen's new methodology is inexplicably resulting in frustratingly inaccurate reports of ratings declines for over-the-air viewing and streaming. This disproportionately impacts the measurement of our multicast network's viewers, who are most vulnerable to affordability issues, including those in rural communities, people of color, and older Americans.

Speaker #4: The fact is that we have seen no letup in the demand for our advertising products in the general market. And sales execution is on point.

Adam Symson: The fact is that we have seen no letup in the demand for our advertising products in the general market, and sales execution is on point. Nielsen's overnight change suddenly impacted our supply of impressions, impacting our revenue. We began seeing a revenue impact from Nielsen's methodology change in March, and since then, our team has been advocating aggressively for Nielsen to make a public disclosure outlining the magnitude of the discrepancy in their data. Of course, I can't end a discussion on advertising without at least a nod to what we expect to be this year's political revenue windfall as a result of our excellent station footprint, our focus on sales execution, and the record amount of money expected to be spent on the upcoming midterms.

Speaker #4: But Nielsen's overnight change suddenly impacted our supply of impressions, impacting our revenue. We began seeing a revenue impact from Nielsen's methodology change in March, and since then, our team has been advocating aggressively for Nielsen to make a public disclosure outlining the magnitude of the discrepancy in their data.

Speaker #4: Of course, I can't end a discussion on advertising without at least the nod to what we expect to be this year's political revenue windfall as a result of our excellent station footprint.

Speaker #4: Our focus on sales execution and the record amount of money expected to be spent on the upcoming midterms. We're off to a good start and expect political to be a great story on top of this year's industry-leading core revenue performance we're putting up this year.

Adam Symson: We're off to a good start and expect political to be a great story on top of this year's industry-leading core revenue performance we're putting up this year. I'd like to take a moment now to celebrate some important recognition of the work we do on behalf of our viewers and communities. Scripps has received recent awards and recognitions from three important national organizations. We were honored with six nominations for national news and documentary Emmy Awards, including five for Scripps News and one for WEWS in Cleveland. Scripps News also was recognized with three prestigious national headliner awards, including a Best in Show honor and two Deadline Club finalist nominations, while our local station, KNXV in Phoenix, also received three national headliner awards, and WTMJ in Milwaukee received one.

Speaker #4: I'd like to take a moment now to celebrate some important recognition of the work we do on behalf of our viewers and communities. Scripps has received recent awards and recognitions from three important national organizations.

Speaker #4: We were honored with six nominations for National News and Documentary Emmy Awards, including five for Scripps News and one for WEWS in Cleveland. Scripps News also was recognized with three prestigious National Headliner Awards, including a Best in Show honor and two Deadline Club finalist nominations.

Speaker #4: While our local station KNXV in Phoenix also received three national headliner awards and WTMJ in Milwaukee received one. We're proud of the recognition of our commitment to journalism that improves the lives of those we serve, holds the powerful accountable, and upholds the tenets of our democracy.

Adam Symson: We're proud of the recognition of our commitment to journalism that improves the lives of those we serve, holds the powerful accountable, and upholds the tenets of our democracy. Serving our democracy is one of the things Scripps has done best for nearly 150 years. There's a lot of uncertainty in the world today, from macroeconomic to the media sector. At Scripps, we're acting with urgency on what we can control by employing new technologies to create operational efficiencies, capitalizing on accessible growth areas such as sports and CTV, and improving our balance sheet. This is the essence of our transformation plan, and you're beginning to see how this plan will carry us into the next bountiful chapter of Scripps's long history. And now, operator, we're ready for questions.

Speaker #4: Serving our democracy is one of the things Scripps has done best for nearly 150 years. There's a lot of uncertainty in the world today.

Speaker #4: From macroeconomic to the media sector, at Scripps, we're acting with urgency on what we can control by employing new technologies to create operational efficiencies, capitalizing on accessible growth areas such as sports and CTV, and improving our balance sheet.

Speaker #4: This is the essence of our transformation plan, and you're beginning to see how this plan will carry us into the next bountiful chapter of Scripps' long history.

Speaker #4: And now, Operator, we're ready for questions.

Speaker #1: Thank you. As a reminder to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again.

Operator: Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile a Q&A roster. Our first question comes from Dan Kurnos of StoneX. Your line is open.

Speaker #1: Please stand by while we compile the Q&A roster. And our first question comes from Dan Kernowitz of StoneX. Your line is open.

Dan Kurnos: Great. Thanks. Good morning. First and foremost, I guess, Jason, thanks for the recast. Super helpful on that stuff. Just wanna make sure, housekeeping question, the guide that you gave for Q2, that is relative to the as-reported from Q2 last year, not the recast, correct?

Speaker #5: Great. Thanks. Good morning. First and foremost, I guess Jason, thanks for the recast. Super helpful on that stuff. Just want to make sure housekeeping question.

Speaker #5: The guide that you gave for Q2, that is relative to the as-reported from 2Q last year, not the recast, correct?

Speaker #6: No, that is off of the adjusted combined recast that we provided.

Adam Symson: No, that is off of the adjusted combined recast that we provided.

Speaker #5: Okay. All right. That is helpful. Thank you. Adam, SCRIPPS Sports Network—super smart. You've been kind of leading the charge in CTV here. You had your upfront in late March, obviously, and you launched it before then.

Dan Kurnos: Okay. All right. That is helpful. Thank you. Adam, Scripps Sports Network, super smart. You've been kind of leading the charge in CTV here. You had your upfront in late March. Obviously, you launched it before then. You've picked up PWHL, PBR, women's PBR. Now you've got a real stranglehold on kind of the women's side of the equation. Can you just give us thoughts? Understand the DR market's soft. We all get the macro. As we look ahead, you know, commits, what advertisers are saying, just help us think through, you know, the feedback you're getting. You've been very clever with rights acquisition in an inexpensive manner. You know, sometimes there's a little bit of confusion between what you can show on streaming and what you can show on kind of on traditional broadcast.

Speaker #5: You've picked up PWHL, PBR, Women's PBR now. You've got a real stranglehold on kind of the women's side of the equation. Can you just give us thoughts, understand the DR market soft?

Speaker #5: We all get the macro, but as we look ahead, commits, what advertisers are saying, just help us think through the feedback you're getting. And you've been very clever with rights acquisition in an inexpensive manner.

Speaker #5: So sometimes there's a little bit of confusion between what you can show on streaming and what you can show on traditional broadcast.

Speaker #5: So just help us think through kind of that equation here.

Dan Kurnos: Just help us think through kind of that equation here.

Speaker #7: Yeah. First and foremost, Dan, well, I like to think that we have embraced women's sports, not put it into a stranglehold. But I appreciate what you're getting at.

Adam Symson: Yeah. First and foremost, Dan, well, I like to think that we have embraced women's sports, not put it into a stranglehold, but I appreciate what you're getting at. We've been very intentional in the way we've been acquiring sports, both on the local side and the national side, and see our opportunity as recognizing the value of the distribution we bring to the table. Whether it was with our initial deal with the WNBA, the NWSL, or any of these other sports deals we've done, I think we've been looking for partners who recognize that we bring to the table the opportunity to showcase their league, their games, their athletes on the most ubiquitous platform available. ION is uniquely positioned to be available on OTA, on paid TV, and on streaming.

Speaker #7: We've been very intentional in the way we've been acquiring sports, both on the local side and the national side. And see, our opportunity as recognizing the value of the distribution we bring to the table.

Speaker #7: So whether it was with our initial deal with the WNBA, the NWSL, or any of these other sports deals we've done, I think we've been looking for partners who recognize that we bring to the table the opportunity to showcase their league, their games, their athletes on the most ubiquitous platform available.

Speaker #7: Because ION is uniquely positioned to be available on OTA, on Pay-TV, and on streaming. The launch of SCRIPPS Sports Network, I think, is a continuation of that strategy because it not only positions certain parts of our broadcast in additional new real estate in the streaming space through simulcasts, allowing us to take some of ION's most premium time periods and now simulcast them in a couple of different tiers on streaming platforms essentially expanding the reach of those platforms or expanding the reach of those games and expanding the reach of our network.

Adam Symson: The launch of Scripps Sports Network, I think, is a continuation of that strategy because it not only positions certain parts of our broadcast in additional new real estate in the streaming space through simulcasts, allowing us to take some of ION's most premium time periods and now simulcast them in a couple of different tiers on streaming platforms, essentially expanding the reach of those platforms or expanding the reach of those games and expanding the reach of our network. It also allows us to carefully and efficiently acquire new rights for insurgent or ascendant leagues looking at getting distribution for their games, and allows us to test and learn.

Speaker #7: It also allows us to carefully and efficiently acquire new rights for insurgent or ascendant leagues looking at getting distribution for their games. And allows us to test and learn.

Speaker #7: So, as an example, right now you can watch many of the PWHL games on the Scripps streaming sports network. Major League Volleyball.

Adam Symson: As an example, you know, right now you can watch many of the PWHL games on the Scripps Sports Network, Major League Volleyball, then the finals end up being broadcast on ION. Our move to put all of that on ION has been all about trying to really appease the advertising environment. We see significant demand from advertisers looking to invest behind women's sports. We went to the marketplace knowing that there was already demand for the assets we were acquiring. I think that's gonna benefit us both in linear, and it's gonna benefit us in the streaming space.

Speaker #7: And then the finals end up being broadcast on ION. And our move to put all of that on ION has been all about trying to really appease the advertising environment.

Speaker #7: We see significant demand from advertisers looking to invest behind women's sports. And so we went to the marketplace knowing that there was already demand for the assets we were acquiring.

Speaker #7: And I think that's going to benefit us both in linear, and it's going to benefit us in the streaming space. And I think we'll continue to be really, really careful and efficient in the way we acquire rights, but also really aggressive in the way we demonstrate the value of our distribution.

Adam Symson: I think we'll continue to be really, really careful and efficient in the way we acquire rights, but also really aggressive in the way we demonstrate the value of our distribution. Relative to the ad marketplace, there's been no letup in that demand for live sports. In fact, I would say, you know, when you look at our performance relative to like general market cable and broadcast networks, you see the benefit of our sports strategy. We're just now moving into the Q2 where we have that benefit going on into the summertime. We didn't see that in the Q1. Nevertheless, there has been some softness in the national ad market.

Speaker #7: Relative to the ad marketplace, there's been no letup in that demand for live sports. In fact, I would say when you look at our performance relative to, like, general market cable and broadcast networks, you see the benefit of our sports strategy.

Speaker #7: And we're just now moving into the second quarter, where we have that benefit going on into the summertime. We didn't see that in the first quarter.

Speaker #7: Nevertheless, there has been some softness in the national ad market. I think Jason can provide you a little bit more color on the national ad marketplace, the networks, and even maybe a longer-term or a midterm view of what we expect from networks' margins.

Jason Combs: I think Jason can provide you a little bit more color on the national ad marketplace, the networks, and even maybe a longer term or a midterm view of what we expect from networks margin. Yeah, thanks Adam. You know, we did give a guide of down 10%. That is really being driven by a couple of things. You know, the ratings declines tied to changes in Nielsen methodology that Adam talked about in the script, as well as macroeconomic and geopolitical conditions that are driving uncertainty and has created a little bit of a weaker marketplace for national advertising.

Adam Symson: I think Jason can provide you a little bit more color on the national ad marketplace, the networks, and even maybe a longer term or a midterm view of what we expect from networks margin.

Speaker #8: Yeah, thanks, Adam. So, we did give a guide of down 10%, and that is really being driven by a couple of things. The ratings declines tied to changes in Nielsen methodology that Adam talked about in the script.

Jason Combs: Yeah, thanks Adam. You know, we did give a guide of down 10%. That is really being driven by a couple of things. You know, the ratings declines tied to changes in Nielsen methodology that Adam talked about in the script, as well as macroeconomic and geopolitical conditions that are driving uncertainty and has created a little bit of a weaker marketplace for national advertising.

Speaker #8: As well as macroeconomic and geopolitical conditions that are driving uncertainty and have created a little bit of a weaker marketplace for national advertising. So on the ratings front, I think Adam did a pretty good job summarizing the changes that have happened there and how that is impacting networks that over-index on over-the-air carriage.

Adam Symson: You know, on the ratings front, I think Adam Symson did a pretty good job summarizing that the changes that have happened there and how that is impacting networks that over-index on over-the-air carriage versus cable networks who are generally seeing significant ratings increases. We'll continue to engage there because we do believe that that methodology is flawed. Beyond that, the current macroeconomic environment is having an impact on performance-driven advertisers in the direct response space. Inflatiory pressure and higher fuel costs continue to weigh heavily on the American consumer, and geopolitical instability has created some hesitation in the marketplace and some ripple effects.

Speaker #8: Versus cable networks, who are generally seeing significant ratings increases, and will continue to engage there. Because we do believe that that methodology is flawed.

Speaker #8: Beyond that, the current macroeconomic environment is having an impact on performance-driven advertisers in the direct response space. Inflationary pressure and higher fuel costs continue to weigh on heavily on the American consumer and geopolitical instability has created some hesitation in the marketplace.

Speaker #8: And some ripple effects. And so, from a longer-term perspective, in the short term, that has created a little bit of a drag on revenue and on margin in our segment.

Jason Combs: You know, from a longer term perspective, you know, in the short term, that has created a little bit of a drag on revenue and on margin in our segment. We worked really hard to get the Scripps Networks margin back to a 30% margin business. I think as you look at the implied guide for Q2 and our results for Q1, I would expect that our H2 margin is higher than our H1 margin. You know, Q3 is the heaviest sports quarter in terms of inventory, and Adam talked about the excitement we've continued to see in terms of premium sports inventory. You know, Q4 also brings in seasonal healthcare ad dollars, and you'll start to see some impact from the transformation efforts start to roll in the H2 as well.

Speaker #8: And we've worked really hard to get the networks' margin back to a 30% margin business. I think as you look at the implied guide for Q2 and our results for Q1, I would expect that our second half margin is higher than our first half margin.

Speaker #8: Q3 is the heaviest sports quarter in terms of inventory, and Adam talked about the excitement we've continued to see in terms of premium sports inventory.

Speaker #8: Q4 also brings in seasonal healthcare ad dollars, and you'll start to see some impact from the transformation efforts start to roll in the second half as well.

Speaker #8: And so we remain committed that the Networks' business is a 30% margin business. And while we may have seen a bit of a step back here in the current quarter, we remain committed to driving the business to a long-term 30% margin.

Adam Symson: You know, we can remain committed that this, that the networks business is a 30% margin business. While we may have seen a bit of a setback here in the current quarter, we remain committed to driving the business to a long-term 30% margin.

Jason Combs: You know, we can remain committed that this, that the networks business is a 30% margin business. While we may have seen a bit of a setback here in the current quarter, we remain committed to driving the business to a long-term 30% margin.

Dan Kurnos: Adam, just one follow-up on that, or Jason too. As we think about monetization, obviously, we're continuing to see more live sports move towards programmatic, and obviously CTV in particular is moving towards programmatic. I know you've got a lot of direct response and traditional sales and, you know, it's probably not as applicable to the broadcast component of this, but, I mean, how do you guys think about, you know, pushing deeper into, you know, DSP relationships, leaning into the ad tech ecosystem and getting better fill? You know, even if CPMs come under pressure, you still ultimately get better monetization out of that.

Speaker #5: Adam, just one follow-up on that—or Jason too—as we think about monetization. Obviously, we're continuing to see more live sports move towards programmatic, and obviously CTV in particular is moving towards programmatic.

Speaker #5: I know you've got a lot of direct response and traditional sales, and it's probably not as applicable to the broadcast component of this. But, I mean, how do you guys think about pushing deeper into DSP relationships, leaning into the ad tech ecosystem, and getting better fill? Even if CPMs come under pressure, you still ultimately get better monetization out of that?

Speaker #8: Yeah, I mean, I would argue we are operating right now the best-in-class CTV platform—actually, Dan, going all the way back to sort of the earliest years of digital and CTV.

Adam Symson: I mean, I would argue we are operating right now a best-in-class CTV platform, actually. You know, Dan, going all the way back to sort of the earliest years of digital and CTV, we've been very focused on ensuring that we're maximizing the opportunity with direct sales and programmatic. The leadership we have at the networks level focused on monetizing our CTV across the enterprise, I think is, you know, second to none. You know, I think we're very well invested in that space, and I expect, you know, you can see that in the 26% growth following last year's significant growth, following the year before's significant growth on the CTV side. We haven't just been riding growth in the marketplace.

Speaker #8: We've been very focused on ensuring that we're maximizing the opportunity with direct sales and programmatic. The leadership we have at the networks level is focused on monetizing our CTV across the enterprise.

Speaker #8: I think it's second to none. And I think we're very well invested in that space. And I expect you can see that in the 26% growth, following last year's significant growth, following the year before's significant growth on the CTV side.

Speaker #8: We haven't just been riding growth in the marketplace. I would say we have been catalyzing the revenue opportunity for ourselves by both taking advantage of some of the natural growth, but also doing everything from taking advantage of the ad tech relationships and improving the programmatic stack, but also leveraging our significant leverage in the marketplace with the distributors.

Adam Symson: I would say we have been catalyzing the revenue opportunity for ourselves by both taking advantage of some of the natural growth, but also doing everything from taking advantage of the ad tech relationships and improving the programmatic stack, but also leveraging our significant leverage in the marketplace with the distributors. I mean, the fact is that we represent among some of the most watched premium channels in the connected TV marketplace, and that gives us, I think, significant leverage to ensure that we negotiate terms that benefit us and partnerships that benefit both us and the platforms. So far, it's working exceptionally well.

Speaker #8: I mean, the fact is that we represent among some of the most-watched premium channels in the connected TV marketplace. And that gives us, I think, significant leverage to ensure that we negotiate terms that benefit us, and partnerships that benefit both us and the platforms.

Speaker #8: And so far, it's working exceptionally well.

Speaker #5: It certainly wasn't trying to imply you're leaving money on the table, Adam. It was just trying to understand if there was incremental opportunity as the market continues to shift.

Dan Kurnos: Certainly wasn't trying to imply you're leaving money on the table, Adam. Was just trying to understand if there was incremental opportunity as the market continues to shift. You've done a.

Speaker #5: But you've done a great job with CTV.

Adam Symson: I-

Dan Kurnos: You've done a great job with CTV.

Adam Symson: No, look, I do think there's incremental opportunity and that's why, you know, like Dan, even in my prepared remarks, I talked about continuing to lean into those things that we see as accessible growth areas like connected TV. Launching Scripps Sports, the Scripps Sports Network is an example of that, I think there are going to be many more opportunities for us to leverage technology to improve monetization in CTV, to improve monetization in local CTV. I think there's significant opportunity ahead with political and CTV.

Speaker #8: Yeah. No. Look, I do think there's incremental opportunity. And that's why, like Dan, even in my prepared remarks, I talked about continuing to lean into those things that we see as accessible growth areas, like connected TV. Launching Scripps Sports—the Scripps Sports Network—is an example of that.

Speaker #8: But I think there are going to be many more opportunities for us to leverage technology to improve monetization in CTV, to improve monetization in local CTV.

Speaker #8: I think there's significant opportunity ahead with political and CTV. We're already seeing the beginning of that this year, allowing us to sell connected TV advertising out of our political office.

Adam Symson: We're already seeing the beginning of that this year, allowing us to sell connected TV advertising out of our political office, outside of the markets that we've traditionally been in, because of course, we've traditionally only been able to sell in markets where we had, where we had local stations. Today, we sell nationwide. In fact, a fair amount of the advertising that we saw on connected on in political in Q1 came from outside of our markets. We're off to a really good start there, and I expect that we'll continue to keep the pressure on.

Speaker #8: Outside of the markets that we've traditionally been in because, of course, we've traditionally only been able to sell in markets where we had local stations.

Speaker #8: Today, we sell nationwide in fact, a fair amount of the advertising that we saw on connected on in political in first quarter came from outside of our markets.

Speaker #8: So we're off to a really good start there. And I expect that we'll continue to keep the pressure on.

Dan Kurnos: Super helpful, guys. Thank you so much.

Speaker #5: Super helpful, guys. Thank you so much.

Speaker #8: Thanks, Dan.

Adam Symson: Thanks, Dan.

Speaker #1: Thank you. And our next question comes from Craig Hooper of Hooper Research Partners. Your line is open.

Operator: Thank you. Our next question comes from Craig Huber of Huber Research Partners. Your line is open.

Craig Huber: Great. Thank you. Good morning, guys. Can you just give me an update, if you would, a little bit further on the $125 million to 150 million restructuring transformation program you're working on, I guess, by 2028? Just update us, if you would first, where you think that annualized run rate will be at the end of this year. Any changes on that front?

Speaker #6: Great. Thank you. Good morning, guys. Can you just give me an update if you would, a little bit further on the 125 to 150 million dollar restructuring transformation program you're working on, I guess, by 2028?

Speaker #6: Just update us if you would first where you think that annualized run rate will be at the end of this year. Any changes on that front?

Speaker #8: Yeah. So last quarter, we gave an annualized run rate of 60 to 75 million dollars, which was the exit this year. We adjusted that during this most recent earnings cycle up to 75 million.

Jason Combs: Yeah. Last quarter, we gave an annualized run rate of $60 to $75 million, which will be ex this year. We adjusted that during this most recent earnings cycle up to $75 million. I think we would say we're making good progress on it, and Adam, in a second, can give some sort of higher level thoughts on it. I'll also point out, you know, the move we had in leverage this quarter, and maybe just explain that a bit.

Speaker #8: And so I think we would say we're making good progress on it. And Adam, in a second, can give some sort of higher-level thoughts on it.

Speaker #8: I'll also point out the move we had in leverage. This quarter, and maybe just explain that a bit. So last quarter, when we announced the large transformation initiative and as you referenced, 125 to 150 million dollars, we recently we've been doing a lot of work to sort of lock down our bankable plan of initiatives, expected to be implemented over the next 12 months and per the terms of our credit agreement, we're able to reflect those sort of retroactively back into our trailing eight-quarter EBITDA for purposes of leverage calculation.

Jason Combs: Last quarter when we announced the large transformation initiative, and as you referenced, $125 million to $150 million, you know, we've been doing a lot of work to sort of lock down our bankable plan of initiatives expected to be implemented over the next 12 months. Per the terms of our credit agreement, we're able to reflect those sort of retroactively back into our trailing 8 quarter EBITDA for purposes of leverage calculation. That is, you know, that is the driver behind the big move you see in leverage this quarter, down to 3.9x. That's really tied to not all of the initiatives, but the initiatives that we think we'll have fully implemented by the end of Q1 of next year.

Speaker #8: And so that is the driver behind the big move you see in leverage this quarter down to 3.9 times. And that's really tied to not all of the initiatives, but the initiatives that we think will have fully implemented by the end of Q1 of next year.

Jason Combs: Adam, do you wanna talk a little bit more about bigger picture on transformation?

Speaker #8: Adam, do you want to talk a little bit more about the bigger picture on transformation? Yeah. I mean, we're executing a comprehensive plan that's allowing us to rethink everything about how we deliver service to the customer.

Jason Combs: Adam, do you wanna talk a little bit more about bigger picture on transformation?

Adam Symson: I mean, you know, we're executing a comprehensive plan that's allowing us to rethink everything about how we deliver service to the customer. You know, when I think about our customer, I think about our audience and our advertiser. You know, we spent months examining the opportunity to remake the company across every corner of the business, the front office and the back office. Now we're moving into implementation. You know, I got a lot of comments about how confident I sounded last last quarter when I said, Take it to the bank. I'll tell you, I'm as confident today as I sounded last quarter that we're gonna improve EBITDA by more than 30% to emerge a stronger, more nimble, and more aggressive company oriented for growth.

Speaker #8: When I think about our customer, I think about our audience and our advertiser. We spent months examining the opportunity to remake the company across every corner of the business, the front office and the back office.

Speaker #8: And now we're moving into implementation. I got a lot of comments about how confident I sounded last quarter when I said, "Take it to the bank." I'll tell you, I'm as confident today as I sounded last quarter that we're going to improve EBITDA by more than 30% to emerge a stronger, more nimble, and more aggressive company oriented for growth.

Adam Symson: It's all about our customer, and it's all being done through the lens of the company's vision, we create connection. You know, a lot of it has to do with technology, the use of AI and automation. It's very much oriented towards growth. The most important thing I think investors have to hear is we are on track to achieve exactly what we set out to do.

Speaker #8: It's all about our customer. And it's all being done through the lens of the company's vision we create connection. A lot of it has to do with technology, the use of AI and automation, it's very much oriented towards growth.

Speaker #8: But the most important thing I think investors have to hear is we are on track to achieve exactly what we set out to do.

Craig Huber: I appreciate that. You know, talking about AI, can you give us a little more flavor of how you're using AI to help your services but also to help on the efficiency side? Is it possible to maybe quantify how much you think out of the $125 to $150 million improvement in EBITDA comes from AI? Is that possible?

Speaker #6: I appreciate that. And then, talking about AI, can you give us a little more flavor of how you're using AI to help your services, but also to help on the efficiency side?

Speaker #6: Is it possible that maybe quantify how much you think out of the 125 to 150 million improvement in EBITDA comes from AI? Is that possible?

Speaker #8: Yeah. I mean, I can't quantify that at this point. I would expect that as we roll out different initiatives, when they're in the rearview mirror, we can provide a little bit more color.

Adam Symson: I mean, I can't quantify that at this point. I would expect that as we roll out different initiatives, when they're in the rearview mirror, we can provide a little bit more color. I would say broadly, Craig, you know, there's been a shift with technology that opens up an opportunity for all companies in every industry to be more effective and efficient. I'd say traditionally, the broadcast industry has been too slow to adopt these technologies, and probably as a result of this being a business that has been in consolidation, we haven't taken advantage of stepping back and rebuilding companies in the front office and the back office. Now that's what we're doing at Scripps.

Speaker #8: I would say broadly, Craig, there's been a shift with technology that opens up an opportunity for all companies. And every industry to be more effective and efficient.

Speaker #8: I'd say traditionally, the broadcast industry has been too slow to adopt these technologies. And probably as a result of this being a business that has been in consolidation, we haven't taken advantage of stepping back and rebuilding companies in the front office and the back office.

Speaker #8: And so now that's what we're doing at Scripts. Several years ago, we pioneered a new way of producing newscasts, for example, that leveraged technology that allowed us to reallocate resources so that we could put more reporters in the field and even give higher wages to those reporters.

Adam Symson: Several years ago, we pioneered a new way of producing newscasts, for example, that leveraged technology that allowed us to reallocate resources so that we could put more reporters in the field and even give higher wages to those reporters. We called that then the news initiative, and that was the basis for our neighborhood news strategy, now the geographic beats that I referenced in my earlier comments. You know, we continue to have more reporters in the field covering the community than our competitors. That's really what our consumers care about, and we're leveraging AI and automation to facilitate that process. We also see significant top-line upside from implementing technology and revenue yield management, improvements to account executive productivity.

Speaker #8: We called that then the news initiative. And that was the basis for our neighborhood news strategy. Now the geographic beats that I referenced in my earlier comments.

Speaker #8: We continue to have more reporters in the field covering the community than our competitors. That's really what our consumers care about. And we're leveraging AI and automation to facilitate that process.

Speaker #8: We also see significant top-line upside from implementing technology and revenue yield management. Improvements to account executive productivity. Our account executives, I think, could be made much more productive by leveraging tools that you see in other industries in order to allow them to spend more time in the field from the prospecting all the way to the closing of business than doing administrative work.

Adam Symson: Our account executives, I think, could be made much more productive by leveraging tools that you see in other industries in order to allow them to spend more time in the field, from the prospecting all the way to the closing of business than doing administrative work. I would say, you know, look, you have to recognize, and like I said, I'm happy to get into more details in the future. These aren't themes or broad brush sort of ideas. These are plans with real business cases that have been developed by our employees who have taken a great sense of agency in evolving this business.

Speaker #8: And then I would say, look, these are you have to recognize. And like I said, I'm happy to get into more details in the future.

Speaker #8: These aren't themes or broad brush sort of ideas. These are plans with real business cases that have been developed by our employees who have taken a great sense of agency in evolving this business.

Adam Symson: I, as I said before, you know, even the cost savings opportunities will actually improve our product, both content and advertising, improving our service to audiences and advertisers and generating additional top-line and bottom-line value.

Speaker #8: As I said before, even the cost-savings opportunities will actually improve our product—both content and advertising. Improving our service to audiences and advertisers, and generating additional top-line and bottom-line value.

Craig Huber: My last question, if I may. Just talk a little bit further, if you would please, about the macro environment. Is it letting up at all for you here? Do you feel like it's getting worse? Is there any other categories other than DR that you'd wanna call out that's impacting? I guess as we think back on Q1, did you really start to see it tied into when the Iran war started at the very end of February? Was it tied in directly with that, and has it just continued at that same level with what happened in March, or has it gotten worse? Just couch that for us, if you would, please.

Speaker #6: My last question, if I may. Just talk a little bit further, if you would please, about the macro environment. Is it letting up at all for you here?

Speaker #6: Is it feeling like it's getting worse? Is there any other categories other than DR that you'd want to call out that it's impacting? And I guess as we think back on the first quarter, did you really start to see it tied into when the Iran war started at the very end of February?

Speaker #6: Was it tied in directly with that? And is it just continued at that same level? What happened in March or has it gotten worse?

Speaker #6: Just couch that for us, if you would, please.

Jason Combs: Yeah, I mean, I think, you know, on the network side, you know, we talked a bit earlier in this call about the impact we are seeing and the fact that we would point it back to both sort of macroeconomic conditions and the geopolitical conditions, you know, inflation, gas prices, all those things. That is creating what I would say is some headwinds in the national ad marketplace. We really haven't talked about the local ad marketplace yet, but, you know, as you saw in Q1, from a local ad perspective, we were up 7%. That was best in the industry. For Q2, we guided to down low single digits, again, better than all of our peers guided.

Speaker #8: Yeah, I mean, I think on the network side, we talked a bit earlier in this call about the impact we are seeing and the fact that we would point it back to both sort of the macroeconomic conditions and the geopolitical conditions.

Speaker #8: Inflation, gas prices, all those things. And that is creating what I would say is some headwinds in the national ed marketplace. We really haven't talked about the local ed marketplace yet.

Speaker #8: But as you saw in Q1, from a local ed perspective, we were up 7%. That was the best in the industry. And for Q2, we guided to down low single digits.

Speaker #8: Again, better than all of our peers guided. Unlike Q1, where we saw a lot of growth tied to our sports inventory, Q2 doesn't have the same level of premium sports inventory.

Jason Combs: You know, unlike Q1, where we saw a lot of growth tied to our sports inventory, Q2 doesn't have the same level of premium sports inventory, you know, and we are seeing maybe a little bit of noise in some of our categories from macroeconomic state. But all in all, I would say from a local core perspective, things are pretty stable.

Speaker #8: And we are seeing maybe a little bit of noise in some of our categories from macroeconomic state. But all in all, I would say from a local core perspective, things are pretty stable.

Craig Huber: Great. Thank you.

Speaker #6: Great. Thank you.

Speaker #8: Thanks, Craig.

Jason Combs: Thanks, Craig Huber.

Speaker #2: Thank you. And our next question comes from Avi Steiner of J.P. Morgan. Your line is open.

Operator: Thank you. Our next question comes from Avi Steiner of JPMorgan. Your line is open.

Avi Steiner: Thank you, and good morning. A couple questions here. Just on the ad environment. I apologize if I missed this, a couple minutes I was off. Can you just refresh us on the exposure to direct response advertising and remind us maybe how quickly that came back in kind of prior down cycles? Is it leading? Is it lagging? How should we think about it?

Speaker #6: Thank you, and good morning. I have a couple of questions here, just on the ad environment. And I apologize if I missed this a couple of minutes ago.

Speaker #6: I was off. But can you just refresh us on the exposure to direct response advertising? And remind us, maybe, how quickly that came back in prior down cycles?

Speaker #6: Is it leading? Is it lagging? How should we think about it?

Speaker #9: So from a DR perspective, it really varies by network. But we certainly do have a material portion of our networks revenue, which is tied to DR advertising.

Jason Combs: From a DR perspective, it really varies by network, but we certainly do have, you know, a material portion of our network's revenue, which is tied to DR advertising. What you see, you know, DR advertising is very tied into broader macroeconomic trends and can both, you know, downturn quickly, but also bounce back pretty quickly as well. We are seeing some noise right now that's sort of part of I know you said you missed the beginning of the call, but, you know, the guide we gave for Q2 is both tied to some of those macroeconomic and geopolitical implications on direct response, as well as impacts we're seeing on ratings tied to some recent Nielsen methodology changes.

Speaker #9: What you see DR advertising is very tied into broader macroeconomic trends. And it can both downturn quickly, but also bounce back pretty quickly as well.

Speaker #9: And so we are seeing some noise right now. That's sort of part of I know you think you said you missed the beginning of the call.

Speaker #9: But the guide we gave for Q2 is both tied to some of those macroeconomic and geopolitical implications on direct response as well as impacts we're seeing on ratings tied to some recent Nielsen methodology changes.

Speaker #8: I would say from a speed perspective, it snaps around pretty darn quickly. And one good example of that is what we saw in fourth quarter.

Jason Combs: I would say from a speed perspective, it snaps around pretty darn quickly. One good example of that is what we saw in Q4. The beginning of Q4, we were a little soft with DR as a result of the government shutdown, its impact on employment and its impact on Medicare enrollment. When the government shutdown ended, it snapped back. You know, I think that the bottom line here is uncertainty is not good for the American economy. Uncertainty is not good for the American consumer because they hold on to their dollars. The greater level of certainty that we can have, the easier things will be in the ad marketplace.

Speaker #8: The beginning of fourth quarter, we were a little soft with DR. As a result of the government shutdown. It's impact on employment. And it's impact on Medicare enrollment.

Speaker #8: When the government shut down ended, it snapped back. And so I think that the bottom line here is uncertainty is not good for the American economy.

Speaker #8: Uncertainty is not good for the American consumer because they hold on to their dollars. And so the greater level of certainty that we can have, the easier things will be in the ad marketplace.

Avi Steiner: That's super helpful. Then on the enterprise value growth that you're putting in via the cost savings at revenue growth initiatives. Just on the cost savings side, and apologies again if I missed this as well, what is the cost of the company, if any, for some of the transformation initiatives you're undertaking and maybe timing of any of those costs?

Speaker #6: That's super helpful. And then on the enterprise value growth that you're putting in, via the cost savings, and revenue growth initiatives, just on the cost savings side, and apologies again if I missed this as well, what is the cost of the company, if any, for some of the transformation initiatives you're undertaking and maybe timing of any of those costs?

Speaker #8: Are you asking specifically the cost to achieve?

Jason Combs: Are you asking specifically the cost to achieve?

Speaker #6: Yes.

Avi Steiner: Yes.

Speaker #8: Yeah. Yeah. So we guided to the lift in EBITDA, 125 to 150 million dollars. We would estimate 40 to 50 million dollars of cost to achieve with the largest portion of that falling in the back half of this year.

Jason Combs: Yeah, yeah. We guided to the lift in EBITDA of $125 to 150 million. We would estimate $40 to 50 million of cost to achieve with the largest portion of that falling in the back half of this year.

Speaker #6: Super helpful. And then if I could sneak one more in quasi-housekeeping, just quasi-understanding. The recap financials in the supplemental part of the disclosure was very helpful.

Avi Steiner: Super helpful. If I could sneak one more in, quasi housekeeping, just quasi understanding. The recap financials in the supplemental part of the disclosure was very helpful, so thank you.

Speaker #6: So thank you. I'm wondering if you could provide the L8Q EBITDA for the same base of assets you own that is underlying again that disclosure, which was helpful.

Jason Combs: Yep.

Avi Steiner: I'm wondering if you could provide the LQA EBITDA for the same base of assets that is underlying again, that disclosure, which was helpful. Then refresh us, if you can, what's left to close and dollars in and dollars out. Thank you all for the time.

Speaker #6: And then refresh us, if you can, what's left to close and dollars in and dollars out. And thank you all for the time.

Speaker #8: So the LQ8, that supports that 3.9 calculation on leverage is 568 million dollars. What's left to close is I think was the other part of your question.

Jason Combs: The LQA that supports that 3.9 calculation on leverage is $568 million. What's left to close is I think was the other part of your question. You know, we are awaiting closure of our swaps with Gray, and sort of that getting that final process done. We also have a transaction with Inyo that is before the FCC and DOJ right now as well.

Speaker #8: We are awaiting closure of our swaps with Gray. And sort of getting that final process done, we also have a transaction with Inyo to that is before the SEC and DOJ right now as well.

Avi Steiner: Do you have the dollars for those? I know there's no dollars in the swap. Remind us on the dollars of INYO, and do you have the 568 without the cost saves, if you have? Thank you again for the time.

Speaker #6: And do you have the dollars for those? I know there's no dollars in the swap. Remind us on the dollars of Inyo. And do you have the 568 without the cost saves, if you have?

Speaker #6: And thank you again for the time.

Jason Combs: I don't have that number readily available, but it is a little over $100 million of cost savings that is reflected backwards into that. That the LQA number from an INYO perspective, it was, it is in the kinda mid $50 million range. It's, yeah, it's somewhat dependent on timing. Right, I think in our-

Speaker #8: I don't have that number readily available. But it is a little over 100 million dollars. Of cost savings, that is reflected backwards into that.

Speaker #8: That LQ8 number, from an Inyo perspective, it was it is in the kind of mid-50 million dollar range. It's somewhat dependent on timing. But I think.

Avi Steiner: Super helpful.

Speaker #6: Super helpful.

Jason Combs: most, I think in our most recent announcement on that, we said $53 million.

Speaker #8: I think in our most recent announcement on that, we said 53 million dollars.

Speaker #6: Thank you so much.

Avi Steiner: Thank you so much.

Speaker #8: Yep.

Jason Combs: Yep.

Speaker #2: Thank you. And our next question comes from Shannon Q of Barclays. Your line is open.

Operator: Thank you. Our next question comes from Shanna Qiu of Barclays. Your line is open.

Shanna Qiu: Yeah. Thanks for taking my questions. I know you touched on this a little bit earlier, but could you give us a sense of how much, you know, the Scripps Networks' top line guide, the decline in Q2 is related to the overall macro and ad environment versus what you called out on the Nielsen methodology change?

Speaker #10: Hey, guys. Thanks for taking my questions. I know you touched on this a little bit earlier. But could you give us a sense of how much the Scripps Networks top-line guide of the decline in Q2 is related to the overall macro and ad environment versus what you called out on the Nielsen methodology change?

Speaker #8: So I don't think we're breaking it down specifically. I would say both are driving a material impact to the revenue guide that we provided.

Jason Combs: I don't think we're breaking it down specifically. I would say both are driving a material impact to the revenue guide that we provided.

Speaker #8: Yeah. I mean, I think it's important to recognize that on the network side, we sell impressions. And the impressions are determined by your currency.

Adam Symson: I mean, I think it's important to recognize that on the network side, we sell impressions, and the impressions are determined by your currency. Mid-February, overnight, Nielsen's methodology change didn't impact sales execution, and it didn't impact the demand we have in the marketplace. It impacted how many impressions we had to sell. We're working right now with Nielsen to right that ship. We're also not just sort of letting it go. I mean, we're doing what we can to make changes both on the marketing side as well as on the programming side to bolster, to bolster the programming strategy so that we, you know, can see an increase in impressions. We have the customer demand. We have the advertiser.

Speaker #8: So mid-February, overnight, Nielsen's methodology change didn't impact sales execution. And it didn't impact the demand we have in the marketplace. It impacted how many impressions we had to sell.

Speaker #8: And so we're working right now with Nielsen to write that ship. But we're also not just sort of letting it go. I mean, we're doing what we can to make changes both on the marketing side as well as on the programming side to bolster the programming strategy so that we can see an increase in impressions.

Speaker #8: Because we have the customer demand. We have the advertiser. We just need to see the impressions come back. I would say that's separate and aside from some of the macro stuff on the DR side.

Adam Symson: We just need to see the impressions come back. I would say that's separate and aside from some of the macro stuff on the DR side. The general market, the general marketplace has actually held up pretty nicely relative to the demand we're seeing. That's probably as a result of our sports strategy and I think the strength of our sales execution performance.

Speaker #8: But the general marketplace has actually held up pretty nicely relative to the demand we're seeing. And that's probably as a result of our sports strategy and, I think, the strength of our sales execution performance.

Speaker #10: Got it. That's really helpful color. And then I think earlier on the call, you mentioned that you expect full year gross distribution revenue growth of low single digits.

Shanna Qiu: Got it. That's really helpful color. I think earlier on the call you mentioned that you expect full-year gross distribution revenue growth of low single digits. I'm just curious on your thoughts on the pending Charter-Cox merger. Is that reflected in that gross distribution guide that you highlighted?

Speaker #10: I'm just curious on your thoughts on the pending charter Cox merger. Does that reflected in that gross distribution guide that you highlighted?

Jason Combs: We don't generally talk about specific contracts, but I would say is, we feel pretty good about that guide. You know, the fact that we, you know, we went through an impasse in Q2 and with Comcast and were able to maintain our guide on gross and only make a small change in our net guide from low teens to low double digits. I think that that was something that we were pleased with the outcome of that deal. While it does create a very short-term blip in our Q2 financials, really pleased with what that deal means in the midterm and the long term for us.

Speaker #8: So, we don't generally talk about specific contracts. But what I would say is we feel pretty good about that guide, and the fact that we went through an impasse in the second quarter.

Speaker #8: And with Comcast, we're able to maintain our guide on gross and only make a small change in our net guide—from low teens to low double digits.

Speaker #8: I think that that was something that we were pleased with the outcome of that deal. And while it does create a very short-term blip in our Q2 financials, really pleased with what that deal means in the mid-term and the long-term for us.

Speaker #10: Great. Thank you.

Shanna Qiu: Great. Thank you.

Speaker #2: Thank you. One moment. And we have a follow-up from Craig Hooper of Hooper Research Partners.

Operator: Thank you. One moment. We have a follow-up from Craig Huber of Huber Research Partners.

Craig Huber: Thank you. Curious of the Nielsen change you're talking about, are you willing or able to talk about, what % hit that was to your impressions, how you sort of view it? I'm also curious.

Speaker #11: Thank you. Curious, to be the Nielsen change you're talking about, are you willing or able to talk about what percent hit that was to your impressions?

Speaker #11: Are you sort of viewing it in an, also curious if there's anything about it on that front?

Adam Symson: No, I don't.

Craig Huber: You know, anything about on that front?

Adam Symson: Yeah, I don't think that benefits us. You know, to be honest, you heard a similar reference on some other companies' earnings calls that have national broadcast network exposure. This is just something that all of the broadcast networks and streamers inexplicably are dealing with. So, you know, we're working with our colleagues at Nielsen to try and right this so that the advertising marketplace is able to make decisions on their buys with a methodology that, you know, actually reflects what's going on in the television marketplace. It's obviously not the case that cable is growing and streaming and OTA are declining, okay? That's obviously not the case.

Speaker #8: Yeah. I don't think that benefits us. But to be honest, you heard a similar reference on some other companies' earnings calls that have national broadcast network exposure.

Speaker #8: This is just something that all of the broadcast networks and streamers, inexplicably, are dealing with. And so we're working with our colleagues at Nielsen to try and right this so that the advertising marketplace is able to make decisions on their buys with a methodology that actually reflects what's going on in the television marketplace.

Speaker #8: It's obviously not the case that cable is growing. And streaming and OTA are declining. Okay? That's obviously not the case. So at the end of the day, I think everybody recognizes that some changes have to be put back into the system.

Adam Symson: At the end of the day, I think everybody recognizes that some changes have to be put back into the system in order to address this for there to be more accuracy.

Speaker #8: In order to address this for there to be more accuracy.

Craig Huber: Just to be clear, Nielsen has not been able or willing to put out recast numbers on this new methodology over the last 12 months or so?

Speaker #11: And just to be clear, Nielsen has not been able, or willing, to put out recast numbers on this new methodology over the last 12 months or so?

Craig Huber: Just to be clear, Nielsen has not been able or willing to put out recast numbers on this new methodology over the last 12 months or so?

Adam Symson: I can't speak for Nielsen's, what they're willing to do or not.

Speaker #8: I can't. I can't speak for Nielsen's what they're willing to do or not.

Adam Symson: I can't speak for Nielsen's, what they're willing to do or not.

Speaker #11: But they haven't so far in the public domain, right?

Craig Huber: They haven't so far in the public domain, right?

Speaker #8: I don't know that they would recast. I mean, we're only talking about something that went back to sort of mid to late February.

Adam Symson: I don't know that they would recast. I mean, we're only talking about something that went back to sort of mid to late February.

Speaker #11: Yeah. It just would have been helpful, obviously, from their vantage point if they would have been willing to put that numbers, those numbers out there.

Craig Huber: Yeah, it just would've been helpful, obviously, from their vantage point if they would've willing to put those numbers out there.

Adam Symson: Yes, it would've been helpful.

Craig Huber: on a rolling basis the last 12 months.

Speaker #11: This last 12 months. I mean, it's really.

Speaker #8: There's a lot that would have.

Adam Symson: There's a lot that would've been helpful.

Craig Huber: I can tell how upset you guys are, and I don't blame you, frankly.

Speaker #11: I can tell how upset you guys are. And I don't blame you frankly.

Adam Symson: Yeah. There's a lot that would've.

Speaker #8: Yeah. There's a lot of stuff.

Craig Huber: You're not the only ones, of course.

Speaker #11: You're not the only ones, of course.

Speaker #8: Yeah.

Adam Symson: Yeah.

Craig Huber: I shake my head, but thank you guys.

Speaker #11: I shake my head. But thank you, guys.

Craig Huber: I shake my head, but thank you guys.

Speaker #8: Yeah. Thanks, Craig.

Adam Symson: Yeah. Thanks, Craig.

Speaker #2: Thank you.

Operator: Thank you. Our next question comes from Steven Cahall of Wells Fargo. Your line is open.

Speaker #10: And our next question comes from Stephen Cahall of Wells Fargo. Your line is open.

Speaker #12: Thanks for fitting me in. Sorry, I had a little trouble getting into the queue. So Jason, I just wanted to understand the sequential change in core ad growth at local there's a lot in there.

Steven Cahall: Thanks for fitting me in. Sorry, I had a little trouble getting into the queue. Jason, I just wanted to understand the sequential change in core ad growth at local. There's a lot in there, I think, going from +7 to the down low single digit. I know there's a change in local sports. You know, there's the Comcast blackout. Can you help us kinda think about what the underlying sort of core sequential change looks like within that? I know it's a lot less than the 9 percentage points of deceleration, so how do we kinda think about that within?

Speaker #12: I think going from plus 7 to the down low single digit, I know there's a change in local sports. There's the Comcast blackout. Can you help us kind of think about what the underlying sort of core sequential change looks like within that?

Speaker #12: I know it's a lot less than the 9 percentage points of deceleration. So how do we kind of think about that within?

Speaker #8: Yeah. So from a core perspective, the Q1 number, the up 7% had a significant benefit tied to our NHL deals as well as you had the Olympics in there as well.

Jason Combs: Yeah. From a core perspective, the Q1 number, the up 7% had a significant benefit tied to our NHL deals as well as you know, you had the Olympics in there as well.

Speaker #8: I would view it as you take out sort of the sports impact and the overall core marketplace is pretty consistent. With what we've been seeing and not significantly impacted by what's going on sort of more broadly in the economy.

Jason Combs: I would view it as you take out sort of the sports impact and the overall core marketplace is pretty consistent, you know, with what we've been seeing and not significantly impacted by what's going on sort of more broadly in the economy. I think, you know, that down low singles that we put out there is also better than, and most everybody else I've seen in our industry, you know, was kind of down more low to mid singles. So, from that standpoint, I actually see our core as a strength right now.

Speaker #8: And I think that down low singles that we put out there is also better than most everybody else I've seen in our industry. It was kind of down more low to mid singles.

Speaker #8: And so from that standpoint, I actually see our core as a strength right now.

Speaker #12: Yeah. I mean, I just hope that this is Adam. I just hope that investors and analysts recognize that our performance in first quarter is caused to celebrate because we're executing a strategy that is putting significant growth opportunity in front of us cyclical as it may be.

Adam Symson: I mean, This is Adam. I just hope that, you know, investors and analysts recognize that our performance in Q1 is cause to celebrate, because we're executing a strategy that is putting, you know, significant growth opportunity in front of us, cyclical as it may be. Now, of course, we move towards that opportunity on the network side. You know, obviously when you're running a strategy that allows you to vacuum up more core revenue in a local market, you do so recognizing that it's gonna be cyclical with the sports opportunity.

Speaker #12: And now, of course, we move towards that opportunity on the network side. But obviously, when you're running a strategy that allows you to vacuum up more core revenue in a local market, you do so recognizing that it's going to be cyclical with the sports opportunity.

Speaker #12: Yeah. And then kind of a related question on networks growth. I know Q3 is the biggest for sports at networks. But I think just sequentially, one Q to two Q has more sports as well.

Steven Cahall: Yeah. Then kind of a related question on networks growth. I know Q3 is the biggest for sports at networks, but I think just sequentially, Q1 to Q2 has more sports as well, like WNBA, you know, restarting. I guess what I'm trying to figure out is like, if the market hasn't changed as we get past Q3, you know, do we see a big drop off in the rate of decline, or are there other kind of levers that you'll have to pull in either programming, or pricing with upfront or other things, you know, as we get into the back half of the year, yeah, kind of continuation of the trends?

Speaker #12: Like WNBA, restarting so I guess what I'm trying to figure out is if the market hasn't changed as we get past Q3, do we see a big drop-off in the rate of decline?

Speaker #12: Or are there other kinds of levers that you'll have to pull in either programming or pricing, with upfront or other things, as we get into the back half of the year?

Speaker #12: Yeah. Kind of continuation of the trends.

Speaker #8: Yeah. So I think and we touched on these a little bit earlier. I mean, I think from a margin perspective, we expect the second half to be higher than the first half.

Jason Combs: I think, and we touched on these a little bit earlier. I mean, I think from a margin perspective, we expect H2 to be higher than H1. I mean, we do have some sports in Q2, yes, but those ramp up sort of the full quarter in Q3. When you look at sort of the revenue trend line, I would expect to see the year-over-year changes improve when you get into H2 of the year. You also start to pull in healthcare, and I think I also alluded to some of the transformation benefit that will roll through here as well.

Speaker #8: I mean, we do have some sports in Q2, yes. But those ramp up over the full quarter in Q3. And so when you look at the revenue trend line, I would expect to see the year-over-year changes improve when you get into the back half of the year.

Speaker #8: You also start to pull in healthcare. And I think I also alluded to some of the transformation benefit that will roll through here as well.

Speaker #8: And so I do think you'll see a better picture in the back half of the year than you do the first half of the year for the networks business.

Jason Combs: I do think you'll see, you know, a better picture in H2 than you do H1 for the networks business. Even though, you know, that's trending right now below the 30% target, we remain committed to, you know, as we manage through this year and into next year, making decisions we need to make to get this business back to a 30% margin.

Speaker #8: And even though that's trending right now below the 30% target, we remain committed to as we manage through this year and into next year, making decisions we need to make to get this business back to a 30% margin.

Speaker #12: Yeah. Stephen, I would also say it's obviously way too early to be talking about anything from a volume or pricing perspective on the upfront.

Adam Symson: Yeah, Steven, I would also say it's obviously way too early to be talking about anything from a volume or pricing perspective on the upfront. While Nielsen's measurement change may have negatively impacted impressions for OTA and streaming, the fact is the ad marketplace is responding very well to the message that we have out there in the marketplace for the upfront. Our focus is continuing to be on our distribution platform, which grows OTA and streaming and the differentiated programming we have, live sports, specifically women's sports. That's our messaging. That especially that OTA opportunity continues to be, I think, really well-received by advertisers in the marketplace who recognize what's going on in the cable industry and are looking to shift dollars from general market cable into more premium products.

Speaker #12: And while Nielsen's measurement change may have negatively impacted impressions for OTA and streaming, the fact is the ad marketplace is responding very well to the message that we have out there in the marketplace for the upfront.

Speaker #12: Our focus is continuing to be on our distribution platform, which grows—OTA and streaming—and the differentiated programming we have: live sports, specifically women's sports.

Speaker #12: And that's our messaging that especially that OTA opportunity continues to be I think really well received by advertisers in the marketplace who recognize what's going on in the cable industry and are looking to shift dollars from general market cable into more premium products.

Speaker #12: That's what has been behind some of the significant new advertisers coming onto our platform. I mentioned Ameca coming in as the title sponsor presenting sponsor for the Walter Cup finals here on ION.

Adam Symson: That's what has been behind some of the significant new advertisers coming onto our platform. You know, like I mentioned Amica, coming in as the title sponsor, presenting sponsor for the Walter Cup Finals, here, on ION. You know, these are the kind of advertisers historically that haven't been advertisers on our platform and are moving over now to spend with us because we have the product and the distribution they're looking for to reach the people they want.

Speaker #12: These are the kind of advertisers historically that haven't been advertisers on our platform and are moving over now to spend with us because we have the product and the distribution they're looking for to reach the people they want.

Speaker #12: Thanks. And then just the last one for me. So if I understand what's going on in leverage, you're able to take advantage in your credit agreements of the transformation initiatives, which I think just gives you a little bit of breathing room versus covenants versus net leverage calculations.

Steven Cahall: Thanks. Just the last one for me. You know, if I understand what's going on in leverage, you're able to take advantage in your credit agreements of the transformation initiatives, which I think just gives you a little bit of breathing room, you know, versus covenants versus, you know, net leverage calculations. Does that mean you can start to devote this year's free cash flow towards the accumulated pref dividends or otherwise kind of negotiating the pref? Do you think the pref is kind of better left to, you know, maybe be part of like a longer term strategic M&A transaction? Would just love to know how you're thinking about it.

Speaker #12: Does that mean you can start to devote this year's free cash flow towards the accumulated prep dividends or otherwise kind of negotiating the prep?

Speaker #12: Or do you think the prep is kind of better left to maybe be part of a longer-term strategic M&A transaction? We'd just love to know how you're thinking about it.

Speaker #8: Yeah. So first of all, on the comments sort of in cushion, I mean, we already were sort of well with under all of our covenants.

Jason Combs: Yeah. First of all, on the comments sort of on cushion, I mean, we already were well under all of our covenants. While the transformation does provide a benefit into our leverage calculation, like there was already significant coverage there. You know, from a Berkshire dividend perspective, based on the refinancing that we did last year, the large refinancings we did, we cannot pay dividend until 2027, until our leverage is below 4.25, which obviously we're under, and we have less than $50 million outstanding on the B-2 term loan. When you think about the pref, I would think of it this way.

Speaker #8: And so while the transformation does provide a benefit into our leverage calculation, there was already significant coverage there. From a Berkshire dividend perspective, based on the refinancing that we did last year—the large refinancings we did—we cannot pay the dividend until 2027, until our leverage is below four and a quarter, which obviously we're under.

Speaker #8: And is and we have less than $50 million outstanding on the B2 term loan. So when you think about the prep, I would think of it this way.

Speaker #8: Those are the requirements for us to begin paying the dividend. Once we meet those, we would intend to start paying the dividend again. Once we get leverage into the low to mid three times, we would begin looking to address the principal not all at once, but likely in increments.

Jason Combs: Those are the requirements for us to begin paying the dividend. Once we meet those, we would intend to start paying the dividend again. Once we get leverage into the low to mid 3 times, we would begin looking to address the principal, not all at once, but likely in increments. We can do that in 60 million increments. I think that is kind of the way we think about the pref.

Speaker #8: We can do that in $60 million increments. And so I think that is kind of the way we think about the prep.

Speaker #12: Thanks.

Steven Cahall: Thanks.

Operator: Thank you. This concludes our question and answer session and also today's conference call. Thank you for participating, and you may now disconnect.