Ladies and gentlemen, thank you for standing by. Welcome to the Gray Television fourth q 2020 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star then the number one on your telephone keypad. To withdraw your question, press the pound key. I will now turn the call over to Hilton Howell, Executive Chairman and CEO, to begin. Good morning. Thank you, operator. As she mentioned, I am Hilton Howell, the Chairman and CEO of Gray Television. I want to thank all of you for joining our Q4 and -end 2020 earnings call. On the line with me, as usual, are our President and CEO, Pat LaPlatney, our Chief Legal and Development Officer, Kevin Latek, our Chief Financial Officer, Jim Ryan, and our Chief Operating Officer, Bob Smith. We will begin this morning with a disclaimer that Kevin will provide. Kevin? Thank you, Hilton. Good morning, everyone. Certain matters discussed on this call may include forward-looking statements regarding, among other things, future operating results and the impact of the novel coronavirus and its disease, COVID-19, on our future operating results. Those statements are subject to a number of risks and uncertainties. Actual results in future could differ from those expressed or implied in any forward-looking statement as a result of various important factors. For more information about such factors, please refer to our company's most recent reports filed with the SEC, including our most recent annual report on Form 10-K that will be filed today. The company undertakes no obligation to update these forward-looking statements. Gray uses its website as a key source of company information. The website address is www.gray.tv. We also will post an updated investor deck to the website within the next two weeks. Included on this call will be a discussion of non-GAAP financial measures, and in particular, broadcast cash flow, broadcast cash less corporate expenses, operating cash flow, free cash flow, adjusted EBITDA, and certain leverage ratios. These metrics are not meant to replace GAAP measurements but are provided as supplements to assist the public in their analysis and valuation of our company. Included in our earnings release as well as on our website are the reconciliations of non-GAAP financial measures to the GAAP measures reported in our financial statement. Now returning the call to Hilton. Thank you, Kevin. Today, we have lots of very good news to report and to discuss. As we approach the one-year anniversary of the beginning of the most eventful 12 months in my life so far, I am extremely gratified that Gray Television today is able to report record Q4 results, a fantastic acquisition, continuing momentum in our business, and strong guidance for the year ahead. Our people and our company overcame unprecedented challenges over the past year. Last May, despite the challenges, we predicted that we would remain cash flow positive each quarter of 2020. We met that challenge. We never drew on our revolver nor accepted any government financial support. We adopted work from home and report from home, and even produce from home policies very quickly in March. We imposed no pay cuts, no furloughs, no layoffs, no benefit cuts, and no benefit delays. In fact, we expanded health benefits for those exposed or potentially exposed to coronavirus. Our stations expanded their coverage of the coronavirus, the hurricanes, and fierce storms. One even known as a derecho, which I had never heard of before in my life, and widespread social unrest. In fact, in December, we paid bonuses to each and every full-time employee in recognition of their hard work during these hard times. In response, our stations and production companies teamed up to organize and lead extensive efforts to support local residents through fundraisers, virtual concerts, school on television, virtual food drives, and other projects that collectively raised literally tens of millions of dollars for their local communities. In fact, Pat LaPlatney will shortly discuss one such effort that we will be launching this weekend. Our managers and account executives throughout the company put new emphasis on sales training, new business development, and new ways of selling. We also found and executed innovative ways to reduce expenses from top to bottom. Gray Television runs lean and mean, and no one in this company would have it any other way. The results of Gray's collective efforts are now very apparent with today's earnings release. For the full year, our revenues, broadcast cash flow, and operating cash flow exceeded even our pandemic expectations from one year ago. We greatly improved our balance sheet through a successful bond offering and robust stock buybacks. We continued to invest in our stations and even acquired a few new stations to boot. At the end of the year, we intensively dived into our planned acquisition of Quincy Media, which as you know, we announced on the first of this month. Today's earnings release announces record results, which have made us very happy, even if 2020 did not throw a pandemic, a recession, multiple hurricanes, derechos, severe storms, and social unrest our way. Our total revenue for the Q4 was $792 million, an increase of $213 million or 37% from the Q4 of 2019. Net income attributable to common stockholders was $211 million or $2.22 per fully diluted share, which is an amazing 174% increase from the Q4 of 2019. Broadcast cash flow was $424 million, an increase of $195 million or 85% from the Q4 of 2019. Our adjusted EBITDA for the Q4 of 2020 was $404 million, an increase of $189 million or 88% from the Q4 of 2019. Our total core revenue continued its sequential improvement from the troughs of April, reflecting better business conditions at the national and local levels. We ended the year with a total leverage ratio as defined in our senior credit facility of 3.95 times on a trailing eight-quarter basis, netting our total cash balance of $773 million and giving effect to all transaction-related expenses. During the Q4 of 2020, we repurchased roughly 973,000 shares of our common stock at an average price of $16.44 per share, including commissions. For all of 2020, we repurchased in the open market 5.5 million shares at an average price of $13 and change for $75 million. The big stories of the Q4 were the refinancing that we addressed on our prior earnings call in November, and political advertising revenue, which we also addressed on that call, yet continued robustly even after election day. While those topics certainly deserve attention, I want to end my opening remarks addressing two items that occurred after the close of the Q4. First, we announced our acquisition of Quincy Media on February 1st. Upon closing that transaction, Gray Television will own stations serving 102 television markets that collectively reach 25.4% of U.S. television households, leaving us ample room for continued mergers and acquisitions. These 102 markets include the number 1 ranked television station in 77 markets and the first or second highest ranked stations in 93 markets. Those are impressive statistics at any time, all the more so because it was only a few years ago that Gray owned stations in just 30 markets. At that time, our leverage was more than two times higher than it is now. In our press release announcing our planned Quincy acquisition, I expressed how honored and humbled we are to be selected by Quincy shareholders to acquire their terrific company. Those words were heartfelt. Quincy is a very fine company with tremendous television stations and tremendous people, and it has been led for many years by a true giant in our business, Ralph Oakley. The only regret that we have, and the only regret that I have in this transaction is that the broadcast industry will lose Ralph's immense contributions to the NAB, to the NABPAC, to the affiliate boards, and countless other important endeavors for the people who work in broadcasting and for the local residents and businesses who rely on our stations. We pledge to operate the fine stations that we acquire from Quincy in tribute to Ralph's lifelong contributions to local service, through local broadcast stations, local journalism, and love of community and country. The final big news is the announcement we made this morning concerning our dividend. As you know from our prior earnings calls, Gray's board of directors has been intending to formally consider whether market conditions permit us to return to paying quarterly dividends once our total leverage ratio, as defined in our senior credit facility, falls below four times. As you saw in our release this morning, our net leverage ratio did fall below four times at December 31st, 2020. Accordingly, at yesterday's quarterly board meeting, after careful discussion, the directors decided to restart Gray's regularly quarterly cash dividend for our equity shareholders at $0.08 per share or $0.32 a year. Those of you who follow us closely may remember that Gray consistently paid a quarterly dividend for decades prior to the Great Recession. At that time, we reluctantly suspended the dividend to preserve our capital. Thereafter, we placed the highest priority on reducing leverage, growing the company, and more recently, resuming robust stock buybacks. Executing on these priorities has been the singular goal of the management team for really all of the past 12 years. Now today, Gray is several times larger than it was in 2008, with a balance sheet and workforce and portfolio that have never been stronger. The board surveyed this remarkable progress and determined that now is the appropriate time to resume paying a quarterly dividend. This historic move is therefore another confirmation that Gray has successfully executed the long-term recovery and growth plans that we put in place in the darkest hours of the Great Recession. We are especially grateful to our equity and credit investors and bankers for their support of our efforts. With the dividend now returning, Gray's capital allocation priorities will be slightly altered. Our priorities remain first to reduce our leverage over time, and next to return capital to shareholders explicitly through opportunistic stock buybacks and a regularly quarterly dividend. We also anticipate that the future will present opportunities to grow Gray strategically. As I mentioned earlier, we have ample room under the ownership cap so that we will, as always, evaluate acquisition opportunities in terms of our long-term growth goals and capital allocation policies. In short, today is a good day at Gray. We are very proud of our business, our stations, our communities, and most importantly of our people. As you will hear next, we look forward to a very strong year ahead. At this time, I turn the call over to Pat, Kevin, and Jim to provide additional color to today's earnings release. Thereafter, we will open up the line to questions for all of us and for our COO, Bob Smith, who as usual, joins us today to help answer questions in his area. Pat? Thank you, Hilton. Gray was blessed throughout 2020 with political advertising revenue at historic levels and a very wide field of competitive races across our footprint. Geographical location, plus high quality, highly rated local news operations, were once again the one-two punch that's unbeatable. Recall that our earnings call one year ago, we predicted full-year political advertising revenues in the range of $250 million-$275 million. Later, we increased our estimate to be between $275 million-$300 million. When we reported Q3 results in early November, we raised our full-year political advertising revenue guide to at least $380 million. In late December, we announced that we had broadcast over $400 million of political ads to that point in the year, with more orders on the books than anticipated to arrive thereafter. Today, we are thrilled to announce that our political advertising revenue crossed $245 million in the Q4 alone, which exceeded our political revenue in all of 2016, as well as exceeding what was nearly our expectation for all of 2020 at one time. In the end, our political advertising revenue was $430 million for full-year 2020. I'd like to put that number in perspective if I can. In 2016, on a combined historical basis through year-end, Gray generated $9.63 of political advertising revenue per TV household, despite the lack of historical presidential spending levels and some real lackluster statewide races. In 2018, on a combined historical basis through year-end, and with no presidential race at all, Gray generated $8.80 of political advertising revenue per TV household. In 2020, that figure was $17.57 per TV household or 82% more per household than in 2016. It's worth noting, too, that Gray's political advertising revenue per TV household was the highest across all publicly traded television group owners in 2016, 2018, and in 2020. Our combined local and national broadcast revenue, excluding political, which we call total core revenue, was also relatively strong in 2020 despite the pandemic, recession, and political displacement. In each of our 2020 earnings calls, we told you that while April seemed to be the very worst month for our business, we saw continual improvement in core retrans and political advertising revenue as the year went on. The Q4 of 2020 continued this trend, even amidst all the political advertising. Our total core revenue decreased approximately 8% compared to the Q4 of 2019. While significant, much of this decline can be attributed to historically strong political displacement in a large number of our markets. In October, total core revenue declined 22% from the prior year, again, largely impacted by political displacement. In fact, our political advertising revenue in October of $179 million dwarfed our total core revenue in October of $81 million. In November, with political advertising revenue mostly disappearing outside of Georgia, total core revenue declined less than 1% from the prior year. In December, with the resurgence of political advertising in Georgia, total core declined just 2% from the prior year. Overall, the momentum that began in May with the stage 1 reopening continued essentially throughout the year, and thereby gradually diminishing the effects of the pandemic on our business. As we've mentioned previously, when our core business slid in the spring as lockdowns affected many of our clients and nearly all of our viewers, we used the newfound time to refocus on sales training, developing new products for clients, and prospecting for new business. Those back-to-basics exercises helped us post lower core declines and faster recoveries than many of our peers, largely due to new business development. We also believe that these investments in 2020 will continue to benefit us in 2021 and beyond. It's worth highlighting one particular category that's seeing very strong growth right now that we believe will continue for some time. In 2019, we started seeing new advertisers and growing budgets for gambling, which historically included state-run lotteries as well as casinos. With the increasing legalization of sports betting on a state-by-state basis, this category grew to a few million dollars in 2020, while most of our other categories were down for the year. The business has only accelerated in the last few months. Our pacings, which are not necessarily a great predictor for future revenue, are still very encouraging because the gambling category is now pointing to a more than 250% increase over 2020. If anything near that holds, gambling would be the fastest growing core ad category for us for this year. We are hopeful about a return to more normal operating levels in our core business in 2021. So far, our pacings have begun the year in a good spot, and we are increasingly optimistic that we will push back toward 2019 core levels in the Q2 of this year. We also need to highlight the continued growth and momentum in our digital business. We've often mentioned our digital usage breaking new records. That feat continued throughout last year. With 2020 now closed, we can report that over the course of the entire year, our total online sessions rose 24% over 2019. Our users rose 37%. Our page views and video views each rose 13% over the prior year. A year ago, we announced on this earnings call that Gray digital sites had just surpassed 100 million monthly unique viewers for the very first time in December of 2019. In 2020, we blew past that achievement by averaging 123 million users across all platforms each month. Many of you will recall that Gray joined a number of other broadcasters in placing individual local stories, live events, and local news live streaming on Syncbak's new app called VUit, which is best thought of as the Netflix for live, local, and free content. For example, Gray's KCRG in Cedar Rapids streamed its Friday Night Lights 2020 high school football coverage on VUit. Through VUit, this series reached online viewers in 108 DMAs, with one game alone reaching 53 DMAs. Today, VUit hosts content from a total of 164 local broadcast stations, including most Gray stations. The average VUit user visits the app 18 times per month and spends 30 minutes per session. Finally, I'd just like to echo Hilton's comments about the remarkable work being done in all of our markets by our dedicated staff. The extraordinary weather events of last week presented yet another very difficult challenge for news coverage, not only in Texas, but many other states. Our journalists and other team members did heroic work again in making sure that our markets had up-to-the-minute news and critical information. In addition to providing extensive coverage of the weather emergencies, we've teamed up with the Grand Ole Opry and Circle Network to leverage this Saturday's live Opry broadcast to help raise money and awareness of food insecurity. The Opry broadcast will air at 9:00 P.M. Eastern on virtually every Gray station, and I'm happy to report also on Graham's KPRC in Houston, and additional stations owned by the good people at Hearst, Nexstar, and Meredith. All proceeds will benefit Feeding America, a network of 200 food banks and more than 60,000 food pantries in nearly every community across our country. I now turn the call to Kevin. Good morning again. To state the obvious, we are thrilled to have reached an agreement to acquire Quincy Media, and the stations that will join Gray Television are precisely the type of strong local institutions that we have consistently strived to add to our portfolio. In this case, the new markets are also a hand-in-glove fit with Gray's geographic footprint, and even more perfect fit with our company culture of empowering local managers and local professionals to make the content, sales, operational, and staffing decisions that they believe best suit their individual local needs. As disclosed in our Quincy press release, we are divesting the Quincy television stations in all six markets in which both Gray and Quincy already own a full power network-affiliated television station. Wells Fargo commenced a formal divestiture process on the same day that we announced the Quincy acquisition. While first-round bids are not due until tomorrow, we are very encouraged at the level of interest in the divestiture stations that we have seen so far. We are also gratified that the pool of interested parties is wider and more diverse than we've experienced in prior divestiture processes. We expect the process will continue to move quickly with final contracts executed, announced, and submitted to the FCC and DOJ in April. Another major recent development is our successful completion of the negotiation and renewal of our largest batch of retransmission consent agreements. This batch of contracts that expired between late 2020 and January of this year, covers a bit over 40% of our paid MVPD subscriber base through individual contracts with more than 480 different MVPDs. That includes one of the two DBS companies, several of the largest cable operators, and nearly all of our small and midsize cable operators. We successfully concluded retransmission negotiations without interruption to the public with all of those MVPDs, other than two relatively small telco overbuilders representing less than 1% of our total MVPD sub base. Today, only one bankrupt telco operator has refused to continue carrying Gray stations, and that impacts about two-tenths of 1% of our MVPD sub base and an even smaller portion of our total paid subscriber universe. Consequently, we once again began and quietly ended another significant renewal cycle with a success ratio at close to 100%. Looking ahead, we have one postponed negotiation that will occur later this spring that will be priced retroactively to January 1st. This summer and at year-end, we will have a small number of negotiations with MVPDs who cover about 25% of our paid MVPD sub base. In the middle of 2022, we will renew another small number of negotiations with MVPDs who cover around 20% of our paid MVPD sub base. For the Q1 of 2021, we anticipate retransmission revenue will increase by about 15% over the Q1 of 2020. Retransmission revenue should increase in the next quarters this year by a larger amount as a result of the renewal repricing that will occur over the next few months. To put these estimates in perspective, I'll remind you that our retransmission revenue increased 4% in the Q1 of 2020 on a year-over-year basis, then 9% in the Q2 last year, and then 11% year-over-year in both the third and Q4 of 2020. For the full year of 2020, our retransmission revenue increased nearly 9%. These revenue increases are the result of both annual escalators and all of our agreements, as well as repricings of a portion of our MVPD sub base in the Q1 of last year and a significant repricing on April 1 of last year. Finally, we have now received subscriber reports from MVPDs and OTT providers covering nearly all of the first Q3 of 2020 and a good portion of the Q4 of 2020. With more comprehensive data in hand today than we have had available to us at any point last year, we can now report that our total sub counts for 2020 held up much better than anticipated in the darkest days of last summer. As an aside, when we discuss total sub counts, we are only looking at subscribers for whom we are paid a fee because they receive a big four affiliated channel from Gray. In particular, with the benefit of a nearly comprehensive set of MVPD and a more complete set of OTT subscriber reports for 2020, we saw relatively significant increases and decreases at many of the operators throughout the year. The total subscriber count in the Q4 of 2020 declined only 1.1% from total subscriber count in the Q4 of 2019. Given all of the challenges that 2020 threw at everyone, we are certainly pleased the more comprehensive data reveals our total subscriber count declined by such a small amount. Thank you for your time. I'll now turn the call to Jim Ryan. Thank you, Kevin. Good morning, everyone. In addition to this morning's release, we will be filing our 10-K later today, which will have a great deal of additional information for you. Also, as a quick reminder, remember that beginning in the Q1 of 2020, all of our reporting is on an as reported basis because we considered the acquisitions and dispositions of late 2019 and during 2020 as being immaterial. One final quick comment about political. Yes, Q4 was all about the $245 million of political, but I just wanted to point out that that $245 million actually exceeded the $235 million combined historical political from 2018. As Hilton mentioned earlier, our leverage ratio at the end of the quarter was 3.95, netting $773 million of cash on hand. We stated with the announcement of the Quincy transaction at the first of the month that at the end of this year with the Quincy transaction having been closed, we expect our leverage ratio pro forma for Quincy to be approximately four times. During Q4, we increased our cash by $306 million. As of today, we have an undrawn $300 million revolver, so we're in a very strong liquidity position. At this time, we expect we will continue to generate significant amounts of free cash during each quarter of 2021. As of today, we have approximately 95.4 million shares outstanding. In 2020, we generated full year free cash of $559 million, or approximately $5.86 per share with a record-setting political revenue. As we look to 2021, a non-political year, we currently anticipate total year free cash will range between $300 million and $325 million. That is excluding any additional free cash generated by the Quincy acquisition post-closing that transaction. To sum it up, our average 2019, 2020 free cash flow was about $459 million, and we'd anticipate that our average 2021 free cash flow, excluding Quincy acquisition, will be in a range of approximately $430 million-$442 million. Given our strong liquidity position, free cash generation, low leverage, and no debt maturities until 2024, we believe we are in a very good position to thrive, emerge from the effects of the pandemic just as we are today, one of the strongest local broadcast companies in the country. You'll also see in the release that we've returned to formal guidance for Q1. We're pleased with what we're seeing so far at the start of the year. Our total core revenue, we're guiding to an increase of flat to approximately 2%, retransmission revenue growing 15%-16%, and given, as Kevin mentioned, the timing of some additional renewals a little bit later this year, that quarter-over-quarter cadence will pick up a little bit in the back part of the year. Total broadcasting revenue, again, we're guiding to be flat to up approximately 2%, The production companies will generate about $13 million in Q1 in revenue. Operating expenses, our broadcast expenses will be increasing 8%-9%. That's about a $29 million increase. Of that increase, $24 million is represented by increasing reverse compensation to the networks. Production company expenses will be about $16 million. Corporate expenses, including transaction costs related to Quincy, we are anticipating to be about $20 million. To add a little more color on the core revenue in Q1, January was down low single digits. February is up low single digits. Currently, March is appearing to be up low to mid-single digits. We're very encouraged by the cadence month-over-month of the continuing sequential improvement of core revenue. Couple of quick liquidity items for full year 2021. We anticipate cash interest will approximate $180 million. Our capital expenditures of about $80 million. Cash taxes will be in the low $20s millions. At that, I'll turn the call back to Hilton. Thank you very much. Jill, let's begin with any questions that everyone may have. Thank you. As a reminder, if you would like to ask a question, please press star, then the number one on your telephone keypad. If your question has been answered and you wish to remove yourself from the queue, press the pound key. Our first question comes from the line of Kyle Evans of. Hey, thanks. Jim, you ripped through those free cash flow numbers. If you don't mind, could you just slowly tick back through them again? If you didn't give one for Quincy, can you help us think about that plug? I've got some follow-ups. The 2020 free cash was $559 million, and that translates to $5.86 per share with 95.4 million shares outstanding as of today. We believe our free cash, excluding Quincy this year in 2021, will range somewhere between $300 million and $325 million. A blended two-year, 2019, 2020 free cash flow average is $459 million, and that would imply a 2021 free cash flow prior to Quincy of between $430 million and maybe $442 million. The free cash flow generation from Quincy obviously is gonna be dependent on when we close. We are currently anticipating a close sometime in the middle of the year. Obviously, Quincy is free cash flow accretive. We haven't gotten into exactly how accretive that will be right now, in part because Quincy is a private company, and we're trying to respect their private information. We'll have more to say once we've closed the transaction on how much additional free cash flow Quincy will bring in sometime in the second half of this year. I think it would be fair to say that on a two-year blended average basis, whether it's 2019, 2020, 2021, even without Quincy, it's a very compelling free cash flow story, and especially on a free cash flow per share basis. Historically, you've given great CHB numbers when you do deals. Do you anticipate doing that with Quincy? Yes. Quincy is large enough that we will update CHB for Quincy once we close it. I will caution, it may take a couple of weeks or a little bit of time post-closing to get that all pulled together. That is our intention, yes. Great. Thanks. Kevin, you gave us the cadence on retrans growth in 2020, I think you said 4%, 9%, 11%, 11%. Were you implying that we should be thinking about those same deltas off of the 15%-16% year-over-year guide for the 1Q for the balance of the year? No. I was not implying that. I was just simply referring to acceleration in growth because we were renewing a group last year and a large group this year. Given what we have ahead, certainly, as Jim and I both mentioned, the year-over-year increases should be higher in subsequent quarters than we have in this quarter. I don't think that the cadence last year is going to be indicative of this year because we renewed 40-plus% of our subs on January 1st. We didn't have that last year. We won't have a big April 1 renewal like we had last year. We have some going on this summer that we did not have last year. I don't think last year's really indicative, except for the trend line of getting continued increase of the year. Okay. While I have you, can you help us think about the virtual component of your retrans sub base? Could you size that from a number or revenue perspective? If not, which I'm guessing you won't, will you talk a little bit at a high level about what the per sub per month rate has done in virtual since inception? Has it tracked the more traditional cable satellite? One more follow-up. Thanks. The OTT is certainly bigger than we thought it was going to be, and it's grown much faster than we thought it would grow. You've heard this from us before with a couple big guys out there and then some very small OTT providers, and each network taking a different approach by operator. We don't have reverse compensation arrangements with everybody. Some it's just simply we're paid a fee by the network. Others, we negotiate directly and pay a fee. There's a lot of variation. Overall, I would say that our preference is to have people in the pay TV ecosystem. If we had the luxury of choosing, we'd all want them to be with the operator who's paying us the most, not the operator who's paying us the least. In some cases, the OTT guys are the least. In some cases, they're higher than MVPD. It's a mixed bag, and it has a lot to do with when the deal was last negotiated. A deal that we negotiated 3 years ago is not going to be anywhere close to deals that we've negotiated in the last week. It's hard to put generalities around the OTT. Those all renew at different times as well. The rates there have been going up, just as they've been going up in the MVPD place. There's a lot of room to grow on both of them. The OTT providers are definitely large. They've become a meaningful component of our sub base at this point. Great. Lastly, you guys didn't do a call around Quincy, a public congratulations to you and especially Ralph. I hope he's playing golf right now. Can you help us think about the opportunity to further consolidate and grow TV Station Group M&A? Maybe in thinking about that or talking about that, touch on the Supreme Court case and the UHF discount. Thanks. Okay. I'm going to assume that's for me. We still think there's still a lot of stations out there that in smaller groups that we think would be good fits for Gray geographically, operationally, culturally. There obviously are some that would not, but it's a small industry, and folks in this industry are very involved in joint efforts. Just the example Pat mentioned on this weekend's Opry Live, that happens all the time in this business. We know the people who own the stations that we would like to own. They obviously know that we're interested in buying at some point, and hopefully that will happen. I think it's a fairly safe bet that the UHF discount will not survive over the next four years. At this point, as you know, it does not impact us. With the discount, we're at 17%. Without the discount, we're at 24%. After Quincy, we'll be at 25%. We still have a great amount of room to grow the company without worrying about whether the UHF discount is in place or not in place. It would appear based on the Obama administration policy views that are reflected in this administration, that the UHF discount will go away. It's unclear if they'll also raise the cap. Those discussions haven't really seemed to have started yet. There are other focuses at an FCC today, which are obviously split 2-2 as we sit here today. What was the last question, which is probably the first question you asked me? Supreme Court case. Yeah. The Supreme Court case. Obviously, we benefited from the 2017 deregulation that we spent a lot of time lobbying for and supplying lots of evidence to the FCC that acquiring non-big four TV stations is not the end of the republic. We backed that up this past fall with a study by BIA that showed that acquiring non-big four stations and even acquiring big four stations in our markets result in higher news, and more news. We've demonstrated again and again, but we also have hard data to prove that. The Supreme Court case, which Gray asked the Supremes to take up an amicus and then we filed a merits brief to address our unique experience here, unique from other broadcasters, in a different perspective. We were very encouraged by the oral argument. We were encouraged by the briefs. We have no insight into when the Supreme Court's going to act, other than the Supreme Court almost always issues all of its decisions by the end of June. I think we'll see a decision by the end of June. I would caution again, though, a lot of folks think the Supreme Court is considering getting rid of all ownership rules. That's not what's before it. The 2017 FCC deregulation was a very small step that allows us to acquire non-big four stations outside of the largest market. The FCC has allowed non-big four acquisitions in the largest market since 1999, and outside the largest markets only via waiver in certain circumstances. The 2017 is a very small step of common sense. It is not going to unleash great station trading activity, at least with respect to Gray. Perhaps it will with others, but we don't see a great opportunity to be swapping away our legacy number one TV station so that we can pick up a My Network affiliate or a Telemundo in some other market. Again, other people may have different views on what the court decision might mean, but for us, it would mean that there may be some additional independent stations, off-air stations, Telemundo affiliates, CW affiliates, that might make sense for us to acquire as we've done sort of steadily and quietly for many years, through waiver processes. This just eliminates the need for a waiver process. We're encouraged, but it does not open floodgates to massive consolidation as I've read so many people predicting. Thank you so much. Our next question. All right. Doug Katz. Of John Janedis of Wolfe Research. Great. Thank you. Can you guys talk about what you're seeing on the ground from an advertising perspective? Meaning, it sounds like you're tracking flattish call outs for the last 4 months or so before any of the COVID-19 comps, and with a few categories dark. I think the market would have expected more pressure, and results from some of the other station owners were a bit softer than what you guys are seeing. Are you seeing market share gains from lower-rated stations, even given your market share where you are today? Any market share stats you can share, I think would be helpful. As the weaker categories come back into the market, can they be a tailwind that translates to a few points of growth? I guess finally, you talked about the dollars, but how does your gambling footprint look? Bob, you want to take that one? Sure. I'll address the gambling issue first. First of all, there's a tremendous upside, in our view, for the entire year. We're already seeing it in Q1. We saw it in Q4 as well. The gambling money is going to be a significant category from this point forward, and currently we're active. When you talk about it, I should add that most people think of FanDuel and DraftKings, for example, because you see those all the time, but there's several more players in the market, and they're all pretty active. They're active currently in eight of our states with pretty heavy schedules in Q1. There's four other states that are approved but not live yet, but three of them will impact our markets, and we assume that will happen yet this year, and could as early as Q2. You could add those three other states. In addition, there's 14 other states that have pre-filed legislation that potentially we could see those states become active in the second half of the year. Even on its own, in the eight states that are active, it's pretty robust schedules, and our stations are benefiting greatly from that. In regards to your other questions, our market shares are growing. We've outperformed in most of our markets. We have extraordinarily strong sales team, sales management. We probably have, in my opinion, the best sales training program in the business. All that together combined has allowed us to, in often cases, in a lot of markets, outperform our audience market share. I can speak for our group and our senior vice presidents who oversee the stations, they're pretty bullish as the year goes on. I think you're going to see more and more local sales activity. In our case, we spend a lot of time on direct local new sales development, and we're seeing some terrific numbers in that regard. Okay. Maybe, thank you. Maybe Kevin, one quickly for you on the sub count. That 1.1% decline looks like an outlier. Anything in terms of relative over or under exposure in a region or with a distributor to call out there? John, as I said, we saw a lot of noise within the numbers. It's been no surprise when the public reports which big MVPDs have been shedding a lot of customers over the last year. We saw other folks picking them up. What we've been looking at last year and this year in these comments to try to break through the noise is not to pick a date certain, because obviously people all report differently, but to try to look at our total number of subs in the Q4. What we took is, literally, as I said, the total paid big four subs were paid on in the Q4 of 2019, for which we have complete records now, and we have a good number of records and estimates on the complete big four OTT and MVPD revenues we'll get. The total sub base year-over-year from Q4 to Q4, like I said, was just slightly down. That's a big improvement from what we were looking at earlier in the year. We said folks were going to come back. They got jobs and hotels reopened and bars reopened and sports returned. That did seem to occur. We were trying to smooth out the noise, though, looking at full quarter versus full quarter. I don't mean to say that everyone's kind of moving in lockstep. It's just the opposite. When we look at the top 15 operators, I bet you half of them have double-digit moves over the course of the year, up or down. There's a lot of noise in there that shakes out to negative 1%. All right. Thanks a lot. Our next question comes from the line of Aaron Watts of Deutsche Bank. Hi, everyone. Thanks for having me on. A couple questions. Let me start with just an advertising question. Can you talk about what you saw from the auto category in the Q4 and maybe how it's starting off the year here in Q1, Q2? In Q4, auto was still down, but remember, there's a huge amount of noise in October. Political advertisers and auto advertisers always love your local news, and so obviously, I think the whole quarter is not necessarily indicative. If you look at November, it was down about 10% and maybe a little bit softer than that in December, which is still a marked improvement over where it was last April. Far this year, it is still lagging. I'd say overall for the quarter, it's down. On pacing, which is not necessarily completely indicative of where you end up, but down about 10% for the quarter. January was pretty good. February was softer. March, it's still kind of early to see how that breaks. It is definitely better than it had been for many quarters last year, and it does look like it's slowly coming back. Bob, I don't know, or Pat, I don't know if you want to add something to that. Yeah, I would just add that a couple of our key advertisers, including Ford, to name one, that's a real bright spot for us and showing some real positive comps. The other thing I'd add that is Stellantis, the new name for Chrysler Jeep Dodge advertising, was dark in Q4 and really for a considerable amount of time in local spot. They're coming back or have come back here in Q1. Most of those dollars are in March, but there's some still in the process of being placed. That's a positive sign to see them back in play. Yeah, I would just add, we still have issues with chip shortages impacting manufacturing, and I think once the supply chain gets ironed out, you're going to see that category come back much stronger than where it is right now. Okay, that's really helpful. Second question, Kevin, I think I'll point this one at you. With the renewals that you got done at the end of 2020 and early this year, are you comfortable enough yet to put some goalposts around what net retrans growth could look like over the next few years for you guys? No, not really. The short answer. Okay. Let me ask another way. I guess with the renewals you've done on the distribution side and then also with your visibility on the affiliate side, can you give us any more color on how to think about margins for retrans? The retrans margin will be better this year than last year. Remember that we had repriced our network contracts at various points in 2019. On January 1st of 2020, all of them had an annual step-up, and we knew that was coming. We predicted it for five years. It was a timing issue. Last year was just as we said it would be. This year, with so many of the retrans repriced starting last year and now this cycle, net retrans margins should be better. I would say, without quantifying, our net retrans certainly will grow this year over last year in absolute dollars, and that's what we care about. As you know, we're not running the business for margin, we're running for dollars. Net retrans, we've said, will grow over time. Some years it's going to be a little challenged. That was 2020. This year's net retrans will be higher than last year's for sure. Okay. Got it. Thanks for that l ast question from me. Just with the acceleration in streaming service adoption, there's been plenty written on the pressure that prime time viewership has been under. I appreciate that the last year hasn't been a normalized template for viewership. Assuming continued pressure for prime time audiences on broadcast, how do you think about that impacting your business on the local level, both from an audience perspective as well as advertising coming in and perception on that? Yeah. It's Pat. Look, it's not a great trend. On the other hand, it's a trend that's been sort of out there for a number of years. At this point, prime time in terms of the revenue it represents to our company is, I think I've got some kind of range here for you, but it's below 20%, I think. It's not what it used to be, it's not as important as it used to be, and it's nowhere near the amount of money or in a percentage basis that our local news represents. Kevin, you might have something to add there? Yeah. The exact numbers for 2019, 2020, revenue by time period. Network prime time was 15%-16% of our total revenue. 50% of our revenue comes from local news year in, year out. Again, 2019, 2020. Network prime time is 16%. Kevin, I guess just as a follow-up. I appreciate that prime is not driving your revenue base. As you think about your local news viewership and other local content, have the ratings been holding up there considerably better than what we've seen at the prime time slots? I guess I'm just trying to think about kind of the overflow effect on your local content. Bob, do you want to talk about ratings? Actually, the old days of how much prime had an impact on local news is not really an issue anymore. Local news tends to stand on its own, really the lead in and lead out factor, that was certainly a term used much more prominently many years ago, is really not an issue today. My point is that local news can stand on its own. They're necessarily not coming to our 6:00 news, our 10:00 news out of prime or into prime access or anything like that. I guess the bottom line is that prime does not have much impact on our local news viewership. Yeah, I would just add that local-. Not as much. Yeah. Sorry, Pat. I would just add that local news in 2020 had an extraordinarily strong year for a lot of good reason. We found younger viewers actually discovering local news. While viewing levels have moderated, it's still very strong. Okay. Thanks again for the time. Your next question comes from the line of Steven Cahall of Wells Fargo. Thanks. Maybe to start off, Pat, you made some really interesting comments about Q2 being back to those 2019 core levels. You talked about some really strong growth in gaming or gambling. As we think about the mix as you get back to 2019 levels, it sounds like sports betting and others will be a much bigger%. Are there any sectors that you think will be a smaller% going forward? Anything else like gambling that you think is also kind of growing a lot more? Yeah. I think the legal category, for a long time has been growing and we're continuing to see growth there. The health category, which we have a sort of a company-wide focus on, we have a health team, continues to show pretty solid growth. Look, I think right now, as we talked about, auto is soft. There's a lack of cars and issues in the supply chain have caused availability issues. I think once automotive comes back, and I think it will, that's going to put even more pressure out there. That's encouraging. Yep. Jim, I think before you've talked about maybe putting a buyback structure in place that can be automatic during blackout periods or on a grid system. Given the Quincy deal, will you be foregoing that so that you're just going to focus on the dividend and de-leveraging through that transaction? No. Great. Maybe a last one. Last night, Paramount+ talked about a lighter tier that doesn't include local station content, and Peacock has done some of that within NBC. Those are really obviously big constituents, sort of partners of yours. How do you think about the evolution to streaming and how to make sure that your really important local station content is included in a lot of those services going forward? Thank you. As a virtual, we can't point to someone in a room and tell them to answer the question. I apologize for that. The Paramount+ news is, we know as much about it as you do. We have a lot of questions and obviously, we'll learn more as time goes on, but we don't know enough about it. In terms of streaming, we're in the big streaming packages, obviously. In terms of local news, people can get local news on any device currently. It's obviously part of VUit as well as our local websites and our station apps. We're there whether we need our local news in other packages, and there's obviously no shortage of streaming packages and streaming platforms at this point. We're looking at some of them, and some we'll be a part of, and some we won't. Some will be good to be a part of, and some we'll wish we were a part of, and some we don't really need to be a part of. It's a mixed bag. Every day it seems that there's another streaming package. The whole world is obviously getting a lot more complicated, and we need to be in some of them, and we don't need to be in others. What exactly Paramount+ means to us is The news came out after the market closed last night, and we've yet to have a conversation with the network. I know all of us broadcasters are looking for more information from CBS on that. Yeah. Thank you. Thank you. Our next question comes from the line of Jim Goss with Barrington Research. Thanks. A couple of them. First, with regard to your capital allocation priorities, I wonder if you could talk a little more about them right now in light of your resumption of a dividend for the first time in more than a decade, and now the new acquisition of the Quincy stations. Also, on a related basis with Quincy, with a $925 million purchase price, it looks like you're adding nine stations but divesting about six. Is there any guidance you can give in terms of what that net purchase price might be? No, we have no guidance on what that net is, Jim. I think you understand why. We're certainly not negotiating in public with potential divestiture buyers. When the contract is signed up and done, we will, just like we did with other divestitures in the past and other transactions, we'll let everybody know where that net number lands. As far as capital allocation goes, I think first and foremost, look at the free cash flow generation of the company. There is ample room now, A, continue to return to shareholders, in part with the reinstatement of the dividend starting this quarter. As Hilton made clear a couple of minutes ago, there will, from time to time, be a stock buyback. We will continue to reduce our leverage over time, and as made very clear on many calls, that if a good opportunity for a station or a group of stations that our criteria become available, we will always take a look, and we will always be interested. Whether we transact or not depends on the facts and circumstances at that point in time. I think our allocation will be a mix because our cash flows now are large enough and, especially on a two-year blended basis, stable enough that we have the luxury of being able to do a mix of the allocation rather than having focused primarily on delevering over the past several years. Okay. This is Hilton. Can I just add? Sure. Go ahead. Just one thing to that. Really, when the board took on the discussion yesterday, it was pretty clear, and to use a cliche, you can walk and chew gum at the same time. All right? I had probably been the highest one about reinstating the dividend because we had focused, and I have frequently said that besides delevering post-acquisitions, that growing the company is our number 1 priority. It still remains an extremely high priority. We truly believe that we can do both. I chimed in to a previous question with regard to our stock buybacks during blackout periods. We have that in place at a certain price level. I hope we never get to that price level again because we are a much better company. One of the things that the board considered, and that I certainly want to tout, is that this management team is now responsible for a company with the finest balance sheet, the finest group of assets, and the highest free cash flow generating capacity that we have ever had. I've been with the company since 1993. That free cash flow capacity is going to give us the ability to do a lot of things, opportunistically and otherwise. This dividend is important. We hope that as we continue to run lean and mean, that we'll be able to increase the dividend. Relative weaknesses, we will step into the market and buy back stock if it begins to fall excessively. I will tell you guys, and this is just sort of an aside, candidly, Jim, but this time about a year ago, I made a comment during a Q&A session, and Harry Jessell and TVNewsCheck picked up on it. That was during the pandemic and COVID-19, broadcast stocks were the perfect safe haven, and that's proven to be true. At the time, Gray was in the $9s, Nexstar was in the $40s-$50s, and Tegna was in the $9s. You can see what the course of the pandemic has done for our stock prices. We have a heck of a business. We're going to be able to handle all different pieces of it. Okay. Thank you. One other thing. Clearly, local news and other local programming is the most profitable thing any local broadcaster can do in terms of owning your own content. I wonder if you feel you have more room to add additional programming right now, so that might be able to take advantage of in that way, and how that might be impacted by the tremendous surge in additional content availability with all the new streaming services. It's Pat. I want to make sure I understand your question. I think, look, we will add local news at every opportunity, whether it's a recent acquisition or large stations we've had for a long time. Where we add local news, it's a better service to our community and candidly, a better business. I hope that answers your question. Was the question around how we're distributing local news on OTT platforms? No, it was more that, if to the extent you can replace programming, you have to pay a syndication fee for. Oh and replace it with something you create on your own, and you own all of the content or all of the ad spots. That tends to be the most profitable thing any local broadcaster can do. I wonder if there's room for more of that, or is there more of a challenge because of the abundance of programming that's becoming available? No. I would say that there is room to do more local programming, and we've been going down that path for some time now, and that's going to continue. I think you could plan on seeing more, not less local programming on Gray stations. If I could jump in. This is Bob. Just to further answer that question, we've actually eliminated quite a bit of syndicated programming over the last two-year period and saved a substantial amount of money and replaced it in most cases with local news. In fact, we have a couple of our markets currently with no syndicated programming whatsoever. They're substantially larger markets that rely mostly on local news. It's something we've believed in for a long time, and certainly, anytime we get that opportunity to add local news, we try to do that. Okay. Thank you Your next question comes from the line of Michael Kupinski of Noble Capital Markets. Thank you. Thanks for taking the questions. First of all, congratulations on your quarter, and congratulations on Quincy. Regarding Quincy, you indicated that there are going to be $23 million in synergies, and I was wondering, can you break that up between revenue and cost synergies? Also, are you expecting that in your first year of operations, or is this multiple years? First of all, when we talk about synergies, we don't include revenue synergies other than whatever our retrans uplift is, given our contractual rights. The $23 million in Quincy is roughly a third retrans uplift, roughly a third other contractual advantages we bring to the table, and roughly a third of elimination of duplicate costs. It's a nice mixture. The way we have consistently defined a synergy is a fully annualized 12-month amount that the synergy can be achieved and implemented sometime within the first year. To say that a little differently, if you can achieve the synergy day one, then a full 12 months obviously accrues to our benefit. If we achieve that synergy on day 364, we will still score as a synergy the full 12-month annualized amount because we were able to put it into effect within the first year. Perfect. Thanks for that color. Then, as the company has obviously played in smaller markets, and you've just brilliantly executed. Now that your reach is 25%, it may indicate that you need to move into the larger markets. As you see the television industry consolidate, have you changed your thoughts on where Gray plans to position itself in the industry? What is the limit in terms of the size of markets that you might consider? Is it important for the company to reach that 39% ownership cap, and how urgent is that in you achieving that target to get there? Yeah, Michael, this is Kevin. We have not been buying small market stations because we like small market stations. We've been buying high-quality TV stations. Most of them happen to be in mid-size and small markets because that's where the opportunity set has been. In the top 50 markets, there are less than five TV stations that are ranked number one or number two that are not already owned by a network or one of the larger owners like Hearst or Tegna. In the markets 100 to 210, there are still a very large number, or there's a sizable number of TV stations that are not owned by a network or one of the large group owners that meet our requirements of being a number one or strong number two. We have participated in every single TV auction since I've been with the company for nine years now, that involves a TV station that matched the number 1, number 2 test, regardless of market size. We just simply were outbid when stations in larger markets like San Diego, like Las Vegas, came in the market. While we certainly could have purchased those, but we weren't afraid of the market size. It was rather our priority. Hilton talked about our priorities of paying debt down and managing the balance sheet was more important than adding one more TV station. While we certainly regret not being able to buy those great TV stations that were available, our emphasis was on the balance sheet first, and we purchase what we can afford, and if we can't, then we move on. There is no must-have station. I first want to correct the idea that we buy stations in mid-size and small markets because that's what we like. That's where the opportunity set is at. As we look out, again, there are very few opportunities in large markets to own TV stations that meet our requirements. If they become available, we will participate. If there's an opportunity for us to buy more TV stations that meet our requirements, we absolutely are going to look at it. We've said that many times, nothing has changed it, and we're going to look at it in terms of what we can afford and what's in the long-term interest of the company. There is no magic market size. There is no magic cap or ceiling or floor in which we look at these things. We look at number one and strong number two TV stations. I think we will get closer to the cap over the next couple of years. If the UHF discount goes away and station groups come on the market, that would allow us to get there. Those are two pretty important requirements. If no one's offered for sale, it's going to be a long slog to get to 39%. If some groups become available that we can strike a deal with and that makes sense for us, we could be at the cap pretty quickly. We can't control what comes in the market. That's part of the gating issue. Of course, the other is the UHF discount. If the discount goes away, some of our competitors for those stations would not be able to participate in those auctions or those sale processes. If the UHF discount is here, obviously some of our broadcast peers can continue to consolidate. If the discount goes away, there's a smaller number of folks that can compete for larger market stations. Does that answer the question? Yes, it did. Yep. Thanks for the clarification. Sure. Appreciate that. That's all I have. Thank you. Okay. Sure thing. Thanks a lot. Your next question comes from the line of Alan Gould of Loop Capital. Thanks for taking the question. I've got two, please. One, we see what's happening with the big internet platforms starting to pay for newspaper content. Do you think there's a possibility that they will also start paying for broadcast news content? Yeah. How much of your broadcast news content finds its way onto the large internet platforms? The second question is with respect to the reverse compensation. Based on your guidance for Q1, it looks like it's up 20% year-over-year. That seems like more than just escalators. I was wondering if I'm missing something in there. Thank you. On reverse compensation, we had a large step-up on reverse on January 1st this year and last year. Last year, we did not move the top number, the growth very much. Our margin was higher, and our reverse compensation was not as good last year as it has been in prior years. That was, again, a function of renewing all of our network contracts in 2014 with five-year terms. This year was going to be a better year, and I think you'll see coming in at particular margin. I think you'll see a better retrans margin this year for that reason. We're in the process of renewing so many contracts, it's going to drive the gross number up. Again, you saw 15% this quarter on a year-over-year basis. That's going to continue through the year. On your first question. This can go to Pat. Yeah. Yeah, sure. Look, we can't say whether our stations will benefit from the move to have the large platforms begin paying as they are in Australia. I think there is a chance of that happening, and I think in general, supporting the originators of content, which in many instances are local TV stations, is a positive development. Will it happen? Not sure. We certainly hope it does. Can't say at this point. Okay. Thanks for the answers. At this time, there are no further questions. I will now return the call to Hilton Howell for any additional or closing comments. Hilton, you may be on mute. It does appear that he has disconnected. If he has, we just want to thank everybody for participating today, and enjoy the rest of your day. Thank you. Thank you for participating in the Gray Television Q4 2020 earnings conference call. You may now disconnect.