Ladies and gentlemen, welcome to the Gray Television Third Quarter 2022 Earnings Call. Your host for today, Chairman Hilton H. Howell Jr. You may now begin. Thank you, operator, and good morning, everyone. Thank you for being here this morning. As mentioned, I'm Hilton Howell, the Chairman and CEO of Gray Television, and I wanna thank all of you for joining our Third Quarter 2022 Earnings Call. With me today are our Gray executive officers, our President, Co-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. Gray uses its website as a key source of company information. The website address is www.gray.tv. We will file our quarterly report on Form 10-Q with the SEC later today. Included on the call may be a discussion of non-GAAP financial measures, and in particular, broadcast cash flow, broadcast cash flow plus corporate expenses, operating cash flow, free cash flow to the 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 reconciliations of the non-GAAP financial measures to the GAAP measures reported in our financial statements. Certain matters discussed on this call may include forward-looking statements regarding, among other things, future operating results. Those statements are subject to a number of risks and uncertainties. Actual results in the future could differ from those expressed or implied in any forward-looking statement as a result of various important factors that have been identified in the company's most recent reports filed with the SEC, including our most recent annual report on Form 10-K and our most recent earnings release. The company undertakes no obligation to update these forward-looking statements. Now I turn the call to Hilton. Thank you, Kevin. Today, we reported once again record quarter total revenues, better core revenue results than anticipated, and lower expenses than in our guidance. Our political advertising revenue was much stronger than at the same time in the third quarter of 2018, the last midterm election year. In fact, our results on political were up 200% on a GAAP basis and 30% on a combined historical basis. To give you some idea, our total political in 2018 was $372 million, same-station basis. This year, we're expecting over $500 million, half a billion. That's a $130 million improvement, apples to apples. With just a few days remaining before election day, we do anticipate that our full year 2022 total political advertising revenue will approximate $500 million. This is a tremendous amount of political revenue for any company, especially in a non-presidential year. We are thrilled that full year 2022's political advertising revenue appears set to exceed 2018's already very strong political advertising revenue, as I mentioned, by a very wide margin. We are admittedly disappointed that our political ad revenues fell short of our aspirational expectations. Nevertheless, our third quarter financial results overall were extremely impressive. On a year-over-year as-reported basis in the third quarter of 2022, core advertising revenue increased by 23%. Retransmission consent revenue increased by 38%. Broadcast cash flow was $357 million, an increase of 75%. Adjusted EBITDA was $336 million, an increase of 81%. Our net income attributable to our common shareholders in the third quarter was $95 million or $3 per diluted share. Consistent with our prior commitments to allocate our robust cash flow to reducing our leverage, we made voluntary debt principal prepayments of $100 million during the third quarter. November 1, we made a further $100 million voluntary debt principal prepayment, bringing the total voluntary prepayments for the year to $250 million. Also, I'm happy to report that our construction projects at our studios at Assembly Atlanta are running significantly ahead of schedule. We remain on track for our Swirl Films division to begin its productions in its new studios in the first quarter of 2023. We also remain on track to complete the studios and other facilities for NBCUniversal in the summer of 2023, in particular, on June 1, 2023. At that time, we will have a new state-of-the-art television and movie production campus eight minutes north of our corporate headquarters here in Buckhead, Georgia. Also, at that time, we intend to largely pause Gray's funding of construction and development to examine the most profitable avenues by which Gray and other third parties will be able to leverage the full value of the Assembly Atlanta project for Gray shareholders. You will hear on this call that our core revenue is holding strong in this economy, which will generate strong cash flow in the fourth quarter and in 2023. At this time, I'd like to turn the call over to our President and Co-CEO, Pat LaPlatney, who has further color on the quarter. Pat? Thank you, Hilton. Gray's television stations and production companies continue to perform well in the third quarter, despite the current macroeconomic headwinds of political advertising displacement. On a combined historical basis, core revenue held strong in the third quarter, exceeding our guidance by declining just 3% from the third quarter of last year. For context, we earned $130 million more political revenue in the third quarter of this year than the year prior period, while losing only $13 million of core revenue. In addition, our stations did not have any revenues from the Summer Olympics in the third quarter this year, unlike last year. In terms of categories, we saw the auto category turn positive in the third quarter relative to Q3 2021 for the first time in a number of years, and it was a percentage of our core revenue relative to the second quarter of 2022. Additionally, our services sector remained our strongest category, which is unchanged from last year's third quarter. We attribute the muted political advertising displacement on our core revenues to a combination of factors. First, our core revenues benefited from double-digit growth in digital advertising revenues, which are largely unaffected by political advertising displacement. Second, our recently acquired stations, particularly those from Meredith, have larger sales forces selling more effectively than last year, as these sales teams have received some of the very best training available in the industry through our in-house sales training division. Third, our emphasis over the past three years on developing new local direct business is delivering solid results. In fact, we set new records in the third quarter in this area by generating over $29 million from approximately 2,000 new accounts. It's not an overstatement to say that Gray's sales teams have never been better trained or skilled at competing successfully against our broadcast peers and especially our strong competitors in big tech. So far in the fourth quarter, excluding the fog of political displacement, we are still seeing reasonably strong demand from core advertisers, even in markets that are currently inundated with political ads. We believe this demand may signal a better fourth quarter core advertising result than much of the general economic news would suggest. However, we continue to keep a close eye on macro developments and client sentiment. With our success to date, we remain confident that we have the right assets and the right people to weather any economic conditions. Now I'll turn the call over to Bob Smith. Thank you, Pat. Political advertising revenues began this year with strong momentum and shattered our guidance in the first and second quarter of this year. As August began, the momentum was as strong as we have ever seen it, and the political buyers were as upbeat and busy as you would expect in the final weeks of a presidential year rather than the summer of a midterm year. Shortly after our August earnings call, we began to experience large and unexpected pullbacks in political advertising in a number of key races. In several major statewide races, some campaigns completely stopped spending any money on advertising after winning their expensive primaries, a trend that continued in most cases until October. Also, immediately after key primaries that occurred in the first half of August, a couple of the major Super PACs unexpectedly canceled fairly large orders for the general campaign. As a result, we had several close Senate and gubernatorial races where one party's candidate and supporting issue advertising were simply not even on the air in August and September. Meanwhile, the 2022 political field widened in the third quarter with newly competitive state and federal races in places that historically have not been very competitive, such as New York, California, Oregon, and Oklahoma. Gray, unfortunately, does not have much of a presence in those states. Much of the political advertising dollars that moved to these newly competitive races seemed to be diverted from the traditionally hyper-competitive states and markets where Gray does have a very strong presence, such as Alaska, North Carolina, Florida, and Michigan. Despite the unexpected pullback in early August and the widening of the political map, our political advertising revenues for the first nine months of this year were $260 million. That amount nearly matched the $269 million of political revenues that we recorded on a combined historical basis in the first nine months in the presidential election year of 2020. We now expect to finish 2022 with political advertising revenues between $495 million and $505 million, assuming no runoff races after Election Day. Interestingly, 2022 now appears to be the first election cycle in at least 20 years in which the fourth quarter of the year does not produce more than half of our political advertising revenue for the full year. In July and early August, we expected that the year would rival 2022's $652 million of political revenue on a combined historical basis. However, note that our 2020 political revenue included roughly $192 million from the presidential primaries, presidential general election, and the two Georgia Senate runoff races that began after Election Day. In other words, we now expect that our 2022 political revenue estimate of roughly $500 million will finish about 6% ahead of our 2020 political revenue after excluding the presidential and the Georgia runoff races. In closing, I want to quickly mention two big operational announcements for this week. First, on Tuesday, Matrix announced that its new automated cross-platform media sales gateway called Admiral launched across all of Gray's markets. We are thrilled to be the first company to transition to this technology. Second, on Wednesday, we announced that we will be launching a new in-house division that will provide news research and news consulting services for our television stations starting January first. With our new scale, now is the time to replace the fine outside vendors that have long served our stations with an in-house team comprised of some of the best experts in the business. Through both of these moves, Gray continues to evolve in a rapidly changing marketplace to ensure that our local news and sales professionals have the resources they need to best serve their local communities. I now turn the call over to Kevin. Thank you, Bob. In the third quarter, we recorded $368 million of Retransmission revenues, which were slightly above year-ago results on a combined historical basis and at the midpoint of our guidance range. As expected, Retransmission expense, also called network comp, was $226 million, which was higher than the year-ago period due to escalators in our network affiliation agreements. As a reminder, Gray has not had any material Retransmission agreements repricing between the middle of last year and the start of 2023. Currently, our Retrans revenues reflect the interplay of annual price escalators in our Retrans contracts and the declines in the number of paying subscribers. In the second quarter of 2022, we experienced larger declines in traditional MVPD subs than we have previously encountered. Most, but not all of those losses were made up by increasing OTT sub numbers. In the second quarter of 2022, our pay TV subscriber total declined by a low single-digit figure from the second quarter of 2021, which represents a bit of an uptick from our generally flat sub-levels. We are hopeful that the third quarter and fourth quarter sub numbers will be better than the second quarter sub reports, due to the return of fall sports. Still, to be conservative, we are now using the more conservative estimates for subscriber levels at the Pay TV companies in our Retrans models. At this time, we expect our gross Retrans revenues will approach $1.5 billion for the full year of 2022. Around the end of this year, we will reprice some major Retrans contracts that cover about 22% of our MVPD sub base. We expect to renew those contracts on favorable terms with minimal disruption, just as we have in prior years. With the uncertainty around pricing for a large portion of our Retrans contracts combined with less visibility into sub trends, we do not have sufficient visibility into Retransmission revenue for 2023. That said, over a multi-year basis, we continue to believe that we will be able to unlock the full value that our stations confer on all distribution systems, which in turn will result in increases in both gross and net Retransmission revenues. Now turn the call to Jim Ryan. Thank you, Kevin. Good morning, everyone. Hilton, Pat, Bob, and Kevin have covered the key highlights of the quarter, so my remarks will be relatively short. As Hilton mentioned a little earlier ago, we've already prepaid year-to-date $250 million of our term loans. We also required amortization of $11 million on our term loan D's, so our total debt reduction through November 1 of this year is currently at $261 million. Turning to full year 2022 outlook, I would say that obviously this is a forecast on our forecast as of today, and actual facts and circumstances could change things before we get to year-end. Our core revenue is approximating $1.5 billion. As we've already said, we expect political revenue of approximately one-half of a billion dollars. If the Georgia Senate race goes to a runoff, we would expect additional political revenue for the runoff election date through December sixth. Stay tuned next week if that happens or doesn't happen. Retrans revenue, as Kevin mentioned, is approximating $1.5 billion. Our total revenue, we expect will approximate $3.6 billion. Total operating expenses before depreciation, amortization, and gain or loss and disposal of assets will be approximately $2.35 billion, and included in that number is approximately $22 million of non-cash stock comp. Our operating cash flow is defined in our senior credit facility we expect will approximate $1.3 billion for this year, and the last eight-quarter average operating cash flow we expect will approximate $1.17 billion. We anticipate the total principal amount of our outstanding debt at 12/31/2022 will be approximately $6.525 billion, assuming at least an additional $50 million of debt reduction by the end of this year. If the Georgia Senate race goes to a runoff, we obviously will have a little more cash to better pay down a little more debt. We expect free cash before common dividends, stock repurchases, acquisitions, investments and our Assembly construction costs will approximate $650 million this year. Our combined historical 2021 free cash flow was $443 million. With 93.1 million shares outstanding, the average 2021, 2022 combined historical free cash flow per share is $5.39. That's equivalent to 40% of yesterday's closing price of GTN. Again, we expect our operating cash flow as defined in our credit facility to be $1.3 billion. Including amounts already used in 2022, we expect the following approximate material uses of cash for the full year of 2022. Currently, we anticipate cash interest of $345 million. Cash tax payments of $200 million. We have a pending federal and state refunds aggregating $22 million, but we cannot assure anyone that that $22 million will be received before the end of the year. Routine capital expenditures of approximately $125 million. Preferred dividends of $52 million. Required amortization on our term loan D of $15 million. Other uses of cash for the full year 2022 are anticipated to be common stock dividends of approximately $31 million. As we reported in Q2, we had common stock repurchases of $50 million. We currently anticipate that our full-year Assembly Atlanta construction costs will approximate $201 million. Acquisitions and/or investments this year will approximate $85 million. Again, most importantly, in addition to the $250 million voluntary debt repayment we've done and our $15 million required amortization for this year, we anticipate that we will be able to pay down at least $50 million more of debt before the end of the year to bring total debt repayment this year to $315 million. The company is on track to have its best year ever of operating cash flow results on an as-reported basis. Importantly, on a combined historical basis, its second-best year ever of operating cash flow results, only slightly lower than the record set on a combined historical basis in 2020. I'll turn the call back to Hilton. Thank you, Jim. To summarize what you've heard today, Gray Television posted record third quarter total revenues, met our Retransmission guidance, and exceeded our core advertising revenue despite tremendous political displacement. We managed our costs to achieve lower expenses than guidance. In terms of our political advertising revenue, we are truly disappointed that several unexpected factors will keep us from hitting our previous guidance. Nevertheless, we are very proud of a 30% or $130 million increase over apples to apples, midterm to midterm. Still, our political revenue is in line with a combined historical basis to hit a revenue level of 2020 that will be one that we will be proud of. In the end, 2022 is poised to be our second best year ever for total revenue and second best year ever for operating cash flow, with only the presidential and runoff year of 2020 beating this year's results. Operator, at this time, we'd love to open the line for questions. If you have a question at this time, please press star one. Our first caller, question in the queue, is Craig Huber with Huber Research Partners. Please go ahead. Yes, thank you. Maybe a little more color, if you could, please. How much were your Retrans subs down year-over-year, including the OTT benefit? We receive reports on a delayed basis of 1-2 quarters, and so we have been providing the best numbers we have on these earnings calls. On this call, I would address second quarter. The second quarter, I'll just read it so. Our next question comes. Sorry, yeah, let me just finish that. Second quarter, our pay TV subscriber total declined by a low single-digit figure from the second quarter in 2021, which represents an uptick flat sub levels. Because I think last time three months ago, you guys said it was down about 1% year-over-year. Now you're saying it's down in the third quarter low single digits%, if I heard you right. What do you think it's gonna be down for the fourth quarter that impact your Retrans revenue number? We've provided our Retrans guidance. As I said, we have modeled out the second quarter declines for the next several quarters. Again, we won't know what the fourth quarter sub numbers are until basically April of next year. So when we provide our guidance, we're looking at the most recent quarter's full reports that we have. For the fourth quarter, we're modeling the second quarter's mid-single digit Numbers. They could be better as sports return in the fall. They could be, you know, obviously, they could be worse. We don't have visibility into real-time sub numbers or even a slight lag. Our reports come about a quarter to two quarters after the close of the month. Okay, my last question please. Just a little bit more color on your political revenues, why they were less than what you were thinking maybe three months ago. Are you thinking that the total political dollars available in the marketplace are significantly lower than what you were thinking three months ago? Or is it just a shift to those other states that you talked about? We have a lot of detail in Bob's remarks. The two things that happened is in mid-August, we had a number of cancellations and campaigns that went dark that were expected to be spending by all accounts. As they came back late in the quarter, there was a lull there that was not made up. The total dollars coming in to the industry and to spending and advertising in general seems to be fairly strong. The spending was diverted to places like California and New York, Oregon, Washington State, Oklahoma, places where we don't have a strong presence. Places where we do have a really strong presence felt, a number of them fell short. Florida, North Carolina, for example, Michigan, Alaska. We just didn't see the spending there because those dollars seemed to have kinda moved to places that historically are not particularly competitive, and this cycle had become very competitive. Yes, the dollars were there, but they moved to places where we don't own TV stations, for example, in New York City, Los Angeles, San Francisco, Seattle. We have very little presence in Oregon, very little presence in Oklahoma, and we have a big presence in Florida, a big presence in North Carolina, a big presence in Alaska. In a way, the cookie crumbled, if you will. The spending was there, but it. The map has become so much more competitive than folks were expecting three months ago. You can look, even today's reports out of Washington are races that where Biden was up, you know, Biden won by five points or more are seeing tremendous spending from the Dems and the Republicans on House seats in places that were not expected to be competitive three to six months ago. So the dollars are funneling in as expected, but they're going to places that were not on the map six months ago. Craig, please remember, we're up $130 million on where we were at the last midterm election. That's a 30% increase. Our political hasn't decreased. We just haven't hit a presidential election year, which, at least through the first two quarters, we were pacing at three quarters. I apologize. We were pacing at a presidential election year basis. You know, I'm immensely proud of these numbers, immensely proud of this truly gargantuan political number. It's $ half a billion dollars. You know, talking about a miss is a misnomer. Understood. Thank you, guys. Our next question comes from Steven Cahall with Wells Fargo. Please go ahead. Thanks. Jim, thanks for the new free cash flow guidance. First, you know, it came down about $150 million vs prior. I was wondering if you could just kinda help us allocate. The obvious one would be political, but curious if there's anything in Retrans or cash interest that's in there. And just to extend on this, I know you're not guiding to 2023, but I think we're all gonna be trying to do a lot of work to figure out what kinda cash you have next year. So maybe you could talk a little bit for next year about what Assembly CapEx is gonna be. What I'm really trying to figure out is if you'll be able to pay down some debt between Assembly CapEx and the preferred and the common. I've got a follow-up for Kevin. Steve, you're right. I mean, most of that $150 down on free cash is the delta in the political. Cash flows would be up a little bit from our last guide. Obviously, you know, rates have continued to increase. Our current guide is, you know, locked in through November, and we're estimating some numbers for December, but I think it's pretty solid. Probably still go up a little bit in December. There's a little bit of timing difference on our Assembly construction cost. As Hilton mentioned earlier, actually, believe it or not, construction is ahead of schedule. When it's ahead of schedule, then the dollars are a little bit ahead of schedule too, but that's a timing difference between 2022 and 2023. You know, the simple answer is, yeah, it's the political. It's the obvious answer. Construction costs for assembly next year. Hang with me a second. We said we will say in the Q when we file it a little later today, approximately $73 million for full year 2023, which anticipates about $59 million of either. $59 million of land sale and/or certain incentive payments on public infrastructure that we would receive in 2023, and then an additional $20 million of additional incentive payments, probably late 2023 or early, I'd say late 2023 right now based on the construction schedule. I do anticipate that we should have the ability to pay down some debt additionally in 2023. We're still working on our 2023 numbers, so I really don't want to elaborate on full year 2023 yet, but I do expect we will have capacity to pay down some degree of debt as we move through 2023. Thank you. Kevin, just looking at some of the Retrans guide plus your commentary. I think if I understand it correctly, your MVPD renewals in 2023 look a lot like 2022. Sub declines are a little worse, so I'm guessing gross Retrans is a little bit lower. Do you expect to be positive on net Retrans cash flow growth in 2023? Thank you. Steven, we had no renewals in 2022 at all, and no renewals in the second half of 2021. There's not been a repricing of Retrans for an 18-month period. What we have this year is literally just the you know the Retrans rates minus the sub declines for this year. 2023, we'll begin 2023 by renewing some big operators. That will push gross up. Obviously, sub declines will push gross down. Since we don't have a feel of whether the uptick in that we saw in the sub declines was temporary or permanent, it's hard to give guidance. Plus, I don't know where these big contracts are going to end. I think we will get the repricing that we need on those contracts. At this point, we're not. I think it's premature to provide guidance till we know kinda where those numbers are gonna come in. Also we wanna see what the third quarter sub numbers look like. Again, of course, drives people back to more paid TV subs. If the prices of streaming platforms goes up and people return to cable, that's a benefit for us as well. It's just a little. It's hard for us to be talking about 2023 based on subs that were recorded in. Yeah You know, basically second quarter of 2021. There's reason to be optimistic, but we're not ready yet to provide a 2023 guidance. We need more data points. Kevin, would you mind just updating us on the cadence of your affiliate renewals for next year? I don't remember if you covered that in your remarks. Thank you. Yeah, we renewed all of CBS last year. We renewed all of Fox. Was that last year as well? It's last year. Time flies. Meredith CBS stations are up summer of 2023. The Meredith Fox stations are up in 2025. The ABC and NBC contracts expire at the end of 2023. At this point, there's no I think there's a cat or dog here or there that are off schedule. For the most part, we don't have a major renewal cycle with the network until CBS next summer for the Meredith markets, which are about a half dozen. The full ABC, NBC group is up at the end of 2023. Great. Thank you. If you have a question at this time, please press star one. Our next question comes from Dan Kurnos with Benchmark Company. Please go ahead. I didn't realize we were off to the races. A couple of questions for you guys. Kevin, if I can just stick with that theme for a second. Maybe, you know, understanding that you still need more time to see the data, but two parts on Retrans. Just one, if sub declines were to remain elevated, you know, permanently at current levels, you know, for the foreseeable future, is there any way to quantify the impact on your, you know, three-year or medium-term net Retrans CAGR of mid-single digits? And separately, on the reverse side, yes, we know you had some renewals there, but, you know, historically, we thought your portfolio was about 50/50 fixed vs variable. Maybe it's a little bit surprising that the reverse didn't step down with the incremental sub declines. Maybe you can just talk to those two things, and then I have a follow-up. Yeah. We're just not going to talk about guidance. I just. There's, again, too many unknown data points. On the reverse, we don't have a full formula of cable operator- Mm-hmm ... pays this amount, and therefore we pay the network contracts. The OTT piece is becoming fairly reasonable, you know, a lot of noise. Remember, we get sort of net dollars in most cases, not all of them, but most cases are net dollars, and they're obviously lower than our net on the MVPDs. So kinda the interplay. It's harder for us to be making estimates on, again, on net Retrans because we have to make a pretty big assumption on how much OTT is moving as well. I think the reason we didn't see much of a step down on the revenue is a bit also this interplay of how OTT is coming in. We are generally about half and half mixed, but there are also others. Some of those are not moving down. It's not a sort of one-to-one relationship when a $1 Retrans doesn't come in and grow, so it rises $0.50 less of net. The math has become much more cloudy now. Got it. You know, look, help me appreciate the commentary on political from you too, Kevin. I think maybe the bigger concern, just broadly, and hard to know because we haven't seen a lot from anyone else. Maybe you guys had some insight on this, with your, you know, premium partnership. You know, obviously the fundraising seems to be there. I think, Kevin, you intimated the dollars are still there, and it's really more a market shift, which we can all appreciate. We've seen that before. Is there any way to get a sense of, you know, do you guys believe that there's no mix shift to, say, like, CTV or other media? You know, it doesn't seem like social is doing particularly well, but, you know, maybe in, like, the back half of August, September, even into October, you know, maybe there were more digital dollars, maybe it was easier to flex dollars into different races. Is there any way to kinda get a sense of sort of your view on broadcast share of political vs other media? Hey, this is Bob. Fact of the matter, the void of political spending in August after the primaries into September was clearly a lack of funds available in those states where we have large footprints. I mean, that way it wasn't going other places. The fact of the matter is that there was just a pullback and some candidates were also underfunded. It was really a metric of people sitting on the sidelines in key states. As Kevin pointed out a little while ago, the fact of the matter is we didn't get the kind of money we expected or revenue we expected in, you know, a handful of states and really, you know, North Carolina and Florida and at times in Arizona. As Kevin mentioned, Alaska, Michigan, those are just states that, you know, the dollars weren't there. They, you know, had to sit on the sidelines till October, first week of October. To answer the broader macro question, obviously there'll be a lot of reporting coming out in the next few weeks of what the total spend was and what you know, was it with digital broadcast or whatever. Our sense is that there hasn't been a seismic shift in the allocation of the spend. Broadcast is doing fine for the whole industry. It's just the luck of the draw of what footprint you had this year vs historical patterns. We're, as far as we know, broadcast got its fair share or more this cycle, just like it's done every other cycle. Got it. That's super helpful. Thanks for the color, guys. I appreciate it. Our next question comes from Jim Goss from Barrington Research. Okay. Hi. Just a little more slicing and dicing of this. To the extent that usually half of the political dollars tend to come in the fourth quarter, in the first six weeks of the fourth quarter, was there also bigger spending in the earlier parts of the year in the primaries, for example, including, I think there have been some reports that some of the parties have gone across cross-aisle to try to influence the raise spending to influence the potential opponents. I wonder if there were things that happened that created a better experience earlier than you might have expected, that you're then coming down from right now in terms of these, as Hilton Howell was saying, aspirational ambitions. Yeah, yeah, Jim, I think in perfect hindsight, we would agree that we probably ended up with, on a relative basis from historical patterns, more from the primaries, more robust primaries than we probably anticipated. So I think that's part of it. But then again, if the primaries in this cycle were more robust than what history would have suggested, that may bode well for late 2023 and early 2024, when we start looking at and talking about the primary cycle in the 2024 year. That's quite a ways out yet, but you know, it this cycle may become an indicator of what the next cycle look like. We'll have to wait and see what the lineups look like in a year from now. All right. Did the larger markets you've entered make any difference? Though I recognize that, they would have been in the comps as well. On a quarterly basis, we always talk about displacement being influenced by the size of political. Is there some offset in terms of not as much to displace them, perhaps you... ...do a little better in core than you might have otherwise. That's exactly what happened. We did do better in core than we anticipated, and we feel very good about that. It was in the commentary. We're up third quarter. We were down 3% in third quarter. We were down, yeah, which is Beat guidance. Which is better than guidance, yeah. Yeah, we're down, like, $13 million in core, and we had- $130 million in political. $130 million of political. That trade-off was much better than we expected. As far as large market, it really gets down to what market you're talking about. You know, Phoenix was a fairly large number. Maybe not quite as large as we had hoped for, but. Mm-hmm You know, It's a big number. Yeah. That's one of the markets where core is holding up really well, despite the onslaught of political. Okay, that's good. Maybe one other non-political question. You've talked about the construction being close on the studio, and I wonder if you might talk about the route of the project and remind us of the financial impact it might have and whether you're going to use that facility somewhat for your own programming as well as farming it out to content makers. We will use it for some of our own individual production needs, but we will also be using it as a large cash generator. We expect it to bring a lot of cash flow beginning mid-year next year, when it should be completed. The studio itself will finish up June the first of 2023. We'll be making movies there across the board, whether it's an NBCUniversal deal or other potential tenants in the fall. Jim, just to add on. As we've said many times in the past, we are not planning to become a large-scale content production company. We do have production, and we have had it for years. We're adding on to our existing capacity, but the vast majority of what we are constructing in the studio complex will be on a long-term lease to NBCUniversal, and we're merely being the landlord, not the content creator. True fact. Okay. Absolutely. Okay. Well, thanks very much. Thank you. Our next question comes from Nicholas Zangler with Stephens. Hey, guys. Thanks for getting me on here. You know, you guys are guiding core revenues up 9% sequentially into the fourth quarter, and we've heard some very pessimistic views, I guess, on the fourth quarter with, you know, a large CTV player effectively calling for no seasonal uptick. You guys are obviously more optimistic. Just hoping if you could unpack that guide a bit, where you might be seeing some strength, where you might be seeing some softness. I think, you know, in prior years, you know, from 3Q to 4Q, core for you guys has been up maybe 20%. Maybe the 9% here is handicapping some of, you know, the weak macro expectations. You know, just maybe unpacking that fourth quarter expectation relative to some of these weaker views that we've heard. Well, you are right that for us and the entire industry, there is seasonality. Second and fourth quarters are always the strongest of the year, first and third are weaker. An increase sequentially, Q3 to Q4, is natural seasonal influx. I mean, other than the political displacement, I mean, we're pretty happy with what we're seeing so far in our core. You know, whether we go look at October or November, actually, core is down a little bit because of the volume of political. The displacement factor in Q4 is not dissimilar to the displacement we saw in Q3. Then, you know, we feel pretty good about where December probably will come out. It's still a little early to tell because admittedly, we don't have a tremendous amount of visibility yet. People, we tend to wait until after election day to lock in the rest of the year. Based on what we've been seeing so far and what core has been doing in place in markets that doesn't naturally have a lot of political, we're, you know, cautiously optimistic. We've. Our core has held up so far nine months this year pretty well. Absent some massive macro event, we think it'll end up reasonably well for the fourth quarter. Got it. No, that's helpful. You know, on the political side, you guys talked about geography obviously playing a role in some of the political. I guess I'll call it softness relative to maybe the last guide. I'm curious if you could point to any markets where you might actually expect political advertising dollars to match that of the 2020 election? Or maybe that's just not the case at all, but I'm just curious if there are certain markets where that actually might play out. I don't think we've actually looked at. No ... things that way. Internally, we look at midterm to midterm, so all of our internal reports are 2022- 2018, and in 2020, we look to 2016. You know, obviously, 2024, we'll be looking at 2020. You know, I would say there are some markets that were still very strong. You know, Arizona was a disappointment for the total, but it was still pretty strong. We had, you know, a Senate and a governor's race and a really expensive primary for both of those as well. You know, that certainly a bright spot. Nevada was particularly strong. Wisconsin Wisconsin, very strong. You know, Illinois was actually, you know, we have an expensive governor's race there. Not typically a lot of presidential money in Illinois. There's certainly a lot of pockets of strength. I mean, again, as Hilton said, we're gonna have a half a billion dollars of political revenue. That's got to come from somewhere. So there are a lot of pockets of strength. But actually beating 2020, remember, as I you know, as we noted, our 2020 political includes a hundred and ninety-some-odd million dollars of presidential money. That's Bloomberg money, that's Steyer money, and $58 million of Georgia Senate runoff. So it's kinda hard, it was a big hill to climb. The Georgia Senate runoff alone was $58 million, you know. We haven't even hit election day yet. All in all, there was a lot of strength around and certainly going into third quarter, there was a lot of strength. We finished the third quarter, we finished the first nine months, again, out within a hair's breadth of where we were in 2020. Things were really strong. We just hit these lulls in mid-August that messed things up. The map got competitive, as you said, you know, in lots of other places. Right. No, that's helpful. You know, you might have just referred to it a little bit, but is there any way to think of the potential upside from a Georgia runoff, as you suggested? Obviously, you got a flagship presence there, but and maybe if you're willing to offer it, what your crystal ball says on I mean, it's impossible to say, and we certainly don't wanna front run the results of Tuesday's election. Although the polling this week does suggest that it, there's a likelihood it will go to a runoff, but it's impossible to say what kind of dollars that might mean for us. Among the variables is, first of all, you can't compare to 2020 because the runoff cycle this year is 30 days less than 2020. It's one month instead of two months. There's no way to know yet whether if it does go to a runoff, whether that particular race will decide the balance in the Senate or whether the balance in the Senate will be decided on Tuesday. It's just impossible to tell right now. You know, I couldn't predict it any better than I could predict whether I got the winning lottery ticket on Saturday. All right. No, that's fair. Last one, super quick. Local automotive advertising trends still under the interpretation that they're around 15% of the core mix, but seeing any improvement there, or are we still trending at that rate? Thanks. We did see some improvement in third quarter, as you mentioned. We, you know, looking forward, we think it'll continue to improve. About 18% for the quarter, so definitely an improvement. Great. Awesome, guys. Thanks so much. Appreciate it. Our next question comes from Aaron Watts. Please go ahead. Hey, everyone. Thanks for getting me in here. You covered a lot of ground, so I just had two questions. Jim, on your cash stack, remind us your floating exposure as a% of your total debt. I don't believe you're hedged, but maybe confirm that. Just trying to solidify how cash interest expense looks in 2023 vs the $345 you expect in 2022. We haven't finished our 2023 numbers yet, so I'm not prepared to comment on that. I mean, everybody can look at forward curves and at least the curves I was looking at the last couple of days this week would suggest that rates will be peaking in spring of next year and then begin to come down gradually. As far as fixed-floating through the preferred by the end of this year with further debt reduction will be roughly 40% floating and 60% fixed. We are not currently hedged. Okay, that's helpful. As a follow-on to that, with the revised political outlook for this year and resulting less than expected debt paydown in the second half, how does that impact your leverage target outlook that you previously talked about? Does it perhaps keep debt paydown as a top priority a little bit longer than envisioned a few months back, at least until you hit those targets? It would be fair to say that our primary use of free cash will, as we've said consistently for a year now, will be to continue to reduce debt as rapidly as we can. That's not a change, and we will continue to be doing that in 2023 and 2024. Aaron, I'm sorry, it was a kind of a compound question. What was the other part that I'm Leverage ratio. Leverage ratio at the end of the year. We're currently estimating that it'll be approximately in the 5.4 zip code. Not quite as low as we had hoped for, about where we were at the start of the year. We will continue to work away on that as we move through 2023 and 2024 as we continue to pay down debt as quickly as we possibly can. Okay. Thank you. Appreciate your time as always. If you have a question, please press star one. Our next question comes from Alan Gould with Loop Capital. Please go ahead. All right. Well, thanks for taking the question. I've got two quick ones, Jim. First of all, what is your floating rate benchmark? What is SOFR plus what%? We currently are LIBOR-based. Our term loan B and our term loan C are LIBOR 250. Our term loan D that we put in a year ago with the Meredith transaction is LIBOR 300. Kevin, your 4Q Retrans guidance. Are you using the low single digit deterioration you saw in two, or are you assuming further deterioration? Because the MVPDs seem to show worse numbers in 3Q vs 2Q. We are using the second quarter results in our model. Our second quarter was an uptick from what we've seen the past number of years. That's what we are using for the rest of this year. If I can follow on those. Your 3Q, Retrans sequentially is down 3.7%. The midpoint of your 4Q is down 0.6%. Doesn't it appear that you're using a worse number or? We're assuming that there's a continued evolution or transition of customers from the linear or traditional MVPDs to the OTTs, where we're receiving a lower rate than we would be receiving if we were negotiating with the MVPDs. If somebody leaves the MVPD world and goes to a contract that the network's negotiated, and we've said this now, I think all the broadcasters are focused on this, networks are paying us below market rates for the signals that they're putting on these OTTs under contracts that we don't see and that we're not told about. We're just getting, you know, we're getting some money, and it's, you know, it's obviously better to get money than not get money, but right now the delta is meaningful. We could have the same number of subscribers, but if they, if a whole bunch of them move off of Comcast and Charter and DirecTV and wind up on Hulu, our growth still goes, I mean, our net still goes down. We also are trying to be more conservative on our guidance. I'd say we're more than disappointed in missing political, so we're trying to be as conservative as we can in all of our guidances going forward. Okay. Thanks a lot, Kevin. Our next question comes from Craig Huber with Huber Research Partners. Thank you. A couple of follow-ups, if I could, please. Talk a little further, if you would, about auto advertising year-over-year, how that trended for each of the first three quarters, just to get a sense of that cadence. Yes. Auto advertising was down in the first two quarters of this year. As we mentioned today, it turned positive in Q3. I think I mentioned a few minutes ago, we would expect Q4 to be positive over, you know, Q4 2021. Again, you know, it's definitely too early to tell what's gonna happen with 2023, but it's been a long time since we've seen the auto category in the green. If I could ask, can you quantify that? Is it up, like, 5-6% or? To give you the cadence quarter by quarter, first quarter as a percentage of core, excluding political, so this is just pure core, Q1 auto was 15%, Q2 auto was 16%, Q3 auto was 18%. Year-over-year, is it up maybe you can't tell me, but up 5%-7% in the third quarter adjusted pro forma? Q3 2022 was 18%, Q3 2021 was 16%. No, I'm sorry. I apologize. Okay, fine. I can figure out the math. The other thing I wanted to ask you talked about this a little bit, but fourth quarter core advertising, could we talk a little further? Real quick. Sure. Again, if you do it in a dollar basis, Q3 2022 is up about $3.3 million or about 6% over 2021. Okay. That's great. Thank you for that. I want to talk a little bit further, like, hear you talk on core advertising post the election. I mean, like for example, the December, the pace seems at this point, the bookings you have now, how is that looking vs a year ago? Or how's the remaining part of November post-election for core advertising looking vs a year ago? I mean, is it flat? Is it up a little bit, down a little bit? Just get a little sense there, please. Yeah. November is down a touch to say. Normally. Yeah. As it would be, as you'd expect. December, as Jim mentioned earlier, it's a little hard to get a read right now because generally advertisers will wait until after the election to lay everything in for the rest of the year. December's down, I think, low single digits% and, you know, but we're still waiting for, you know, for that to break in earnest. Yeah, we'll see how it develops. Right. That November number, please. I guess you said down, call it low single digits for the whole month. Do you have a sense of what it is post the election for the remaining part of November year-over-year? No, I don't break it down that granular. Yeah. Okay. Okay, cool. Thank you, guys. Yeah. If you have a question, please press star one. Our next question comes from Michael Kupinski with Noble Capital Markets. Thank you. Craig just asked my question, but I just as a quick follow-up. In terms of advertising bookings, typically as you enter the next month or look forward to the next month, I believe you would have about 60% of your advertising booked for the next month. Is that right? And I'm just curious, in terms of bookings for December, would you anticipate that you're at relatively same where you would be in terms of your amount of bookings? Or I'm just trying to get a sense of, you know, how you're seeing some of that, of that delay, you say, in terms of the election. Michael Kupinski, as Pat LaPlatney has said, it's perfectly normal on the Friday before election day. It's hard to get a read on December simply because traditionally people are waiting. They wait until after election day to lock in the rest of their year. There's nothing unordinary about that in every political year cycle. What we can say right now is we look to December as of right now, without you know, obviously you know, muddied waters with the political until next week or the next couple of weeks. We don't see anything unusual. We think core in December should be. It should be a reasonably good December. Now. Okay. I guess going back to the auto question, in terms of the auto category, is it coming from dealerships or manufacturers? I'm just trying to understand where the context of the strength is coming from. Yeah. Well, listen, Bob, there's, you know, a mixed bag 'cause it's both. There's some of our markets where local dealers are back spending in fairly healthy amounts, but also it's manufacturers. The major manufacturers were up in third quarter, most of them, and they're. Same in fourth. The pacing from again the manufacturers looks pretty good. That comes, you know, via our national sales side of the business, and we anticipate based on pacing it should be a pretty good automotive quarter. Okay, great. Okay, thanks. That's all I have. Thank you. If you have a question at this time, please press star one. There are no further questions at this time. All right. Thank you so very much for everyone's attendance today, for your questions. We're actually enormously proud of Q's performance. We look forward to seeing you to talk about our Q4 and the whole year. Thank you. No, it was not closed out. Ladies and gentlemen, this concludes your call. You may disconnect at this time.