Welcome to the Gray Television second quarter 2023 earnings call. I will now turn the call over to Hilton Howell. You may begin. Thank you, operator. Good morning, everyone. As, as Misty mentioned, my name is Hilton Howell. I'm the Chairman and CEO of Gray Television. Thank you all for joining us for our second quarter 2023 earnings call. I am absolutely delighted that today we also have with us on this call, Sandy Breland, our longtime Senior Managing Vice President, who recently became Gray's Chief Operating Officer. Welcome, Sandy. In addition, as usual, I'm joined by Pat LaPlatney, our President and Co-CEO, Kevin Latek, our Chief Legal and Development Officer, and Jim Ryan, our Chief Financial Officer. We will begin with a disclaimer that Kevin will provide. I usually have my headphones on, that's why. Thank you, Hilton. We have talkback. Put call, call on mute, please. Thank you, Hilton, good morning, everyone. Gray uses its website as a key source of company information. 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, in particular, broadcast cash flow, operating cash flow, free cash flow, and certain leverage ratios. These metrics are not meant to replace GAAP measurements, 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 in 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 statements as a result of various important factors that have been set forth 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. Company undertakes no obligation to update these forward-looking statements. I now return the call to Hilton. Thank you, Kevin. Gray Television's strong start in the first quarter of 2023 continued through our second quarter. Today, we beat guidance and consensus estimates on all five key metrics. We beat on core advertising revenue, we beat on retransmission revenue, we beat on political advertising revenue, we beat on EBITDA, and we beat on free cash flow. In particular, our total revenues of $813 million for the quarter exceeded the high end of our revenue guidance. In addition, our total operating expenses of $593 million were below the low end of our expense guidance for the quarter. We are especially pleased at the performance of our television stations during the quarter. Our core advertising revenue increased 4% on a year-over-year basis, with both local and national core up in low single digits on a year-over-year basis. Significantly, and as we had predicted, the auto category also continues to recover strongly for Gray. Meanwhile, political was particularly strong also for a second quarter, preceding a presidential election year. Our strong footprint of number one ranked television stations has and will continue to allow us to over-index on political advertising dollars. As such, we are very much looking forward to the 2024 presidential election cycle. The second quarter of 2023 compares quite well to last year's second quarter, in which we set all-time records for political revenue. The continued strength in Gray's revenue, despite that tough comp, confirms that our television station portfolio is delivering the trusted content that our viewers want. It also shows that the strong content and deep reach that we have will continue to produce real value for our advertising clients. Since the end of the 1st quarter, Gray's leadership team has remained very busy on a number of fronts. First, as we mentioned, we promoted Sandy Breland from Senior Managing Vice President to the role of our Chief Operating Officer. Second, we promoted Matt Jaquint to Chief Revenue Officer, Mike King to Chief Marketing Officer, and Matt Moran to Senior Managing Vice President. Importantly, Gray renewed and extended our CBS affiliation agreement for all the former Meredith markets, as well as all of our legacy Gray Television markets. We're very pleased with this extension and renewal. We reached a historic set of agreements that Pat LaPlatney will cover in more detail with the Phoenix Suns and the Mercury to return their games to broadcast television and to expand the team's reach within its market in Arizona by threefold. We also struck a deal with the CW Network, covering a package of ACC sports rights that partially mitigated the losses from the unfortunate disruption caused by the Diamond Sports bankruptcy. We are happy to report also that phase one of our Assembly Atlanta Studio project is now largely complete. Phase one covers the public infrastructure build-out for the entire Assembly Atlanta project and the construction of the Assembly Studios, which encompasses 19 new stages, most of which are under a long-term lease with NBCUniversal. In fact, as we speak with you today, NBCUniversal is moving into its new sound stages, mill spaces, and offices. Despite the current writers and actors strike, we anticipate that production will begin in the next few months, not only in the leased NBCU facilities, but also in the newly constructed studios that Gray retained for our own use and then for lease to other third-party production houses. We have not yet altered our plans and do not intend to, and do not anticipate to do so in light of the writers and actors strike, which we sincerely hope will be resolved amicably in the near term for the good of all parties in our industry. The investment in Assembly Atlanta over the last few years, and particularly during the first half of 2023, is now largely complete. We anticipate that remaining construction costs to wrap up and finish the Assembly Studios portion of the overall project in the second half of this year will be in a range of between $25 million and $30 million, net of expected governmental incentives, than reimbursements. Over the next five to seven years, the Assembly Atlanta development will be completed with various mixed-use projects across the remaining, roughly two-thirds of the site's total acreage. I will now introduce Pat LaPlatney to provide more color on our operations. Pat? Thanks, Hilton. During the second quarter of 2023, Gray's television stations and production companies continued executing well, seemingly better than other parts of the advertising ecosystem. Once again, our advertising revenue continues to demonstrate positive results, and we expect to see continuing positive trends for the rest of the year. We read with some dismay stories reporting softness in auto advertising, particularly on the national side. Those stories are not reflective of Gray's experience at all. To the contrary, Gray's television stations posted a 20% year-over-year increase in auto in the second quarter, and this increase is led by even larger increases year-over-year in national auto advertising. Meanwhile, our stations continued to excel at developing new business from local customers who previously did not advertise on our platforms. In the first quarter, we are pleased to report that our new local direct business brought in 9% more revenue than the first quarter of 2022. We improved upon that result in second quarter, when we brought in 15% additional revenue from new local direct business over the second quarter of last year. Political advertising has also been strong, as Hilton mentioned. In both the first quarter and the second quarter of 2023, we have literally doubled the amount of political ad revenue that our current station portfolio received in 2019, the last year that preceded a presidential election year. Political advertising revenue has been particularly strong in Arizona, Louisiana, Virginia, and Iowa. We're not prepared to make any full year political ad estimates at this time, given the wide range of uncertainties this far out. Still, we're encouraged by the doubling of political revenue over 2019 levels that we've experienced in the first half of 2023. In addition to these sales successes, Sandy and I, with assistance from many others, are actively engaged in discussions with certain professional sports teams and leagues. Recall that in early May, the Phoenix Suns and Phoenix Mercury announced an innovative deal that returned their games to television stations in Arizona, owned by Gray. At that time, our deal was conditioned on the expiration of an arrangement between Diamond Sports and the Suns and Mercury. In July, the Diamond deal for the Suns expired, and the Suns and Mercury deal with Gray became effective. We're all very excited to be able to present these great teams to all the people of Arizona. Our discussions with other teams and leagues indicate that the new sports rights deal we have in Arizona can work in other markets as well. Whether we replicate that structure or find new ways to partner with professional franchises, we see a growing recognition in the market that returning professional sports to local broadcast stations will increase marketing value, advertising sales revenues, fan engagement, as well as team value. We're spending a lot of time analyzing these professional sports opportunities. In the coming months, we hope to have more innovative sports rights partnerships to announce that will return local teams to our broadcast stations and to local fans. I now turn the call to Sandy. Thank you, Pat. I'm Sandy Breland, I'm very happy to join my colleagues on this earnings call, especially when we have so many positive developments and successes. Personally, my career began in television newsrooms, I focused a good amount of my time the last few years on Gray's local news resources, including our InvestigateTV and Washington, D.C., operations. I'm therefore very honored to join this call when Gray has so much great news to report about its own news efforts. In June, with the greatest sense of humility, Gray received recognition from the NAB Leadership Foundation's 2023 Celebration of Service to America Awards, which honor excellence in community service by local radio and television stations. This year, Gray received the TV Ownership Group Award in recognition of the outstanding work by Gray's InvestigateTV unit and its series, The Sixth, which exposed a critical shortage of public defenders across the country. The foundation also selected Gray's KTTC in Rochester, Minnesota, as its Small Market Television Station winner for its Fifth District Eagles Cancer Telethon, while KWCH in Wichita, Kansas, and WTVY in Dothan, Alabama, were named finalists for their exemplary community service. During the second quarter, the Radio Television Digital News Association awarded a combined 78 regional Edward R. Murrow Awards for excellence in journalism to 31 of Gray's local stations. The awards roster was led by 10 separate awards to Hawaii News Now in Honolulu, Hawaii, and 7 separate awards to WVUE in New Orleans, Louisiana. This September, Gray will launch across his stations a new weekday news magazine program called InvestigateTV Plus. The news magazine will showcase groundbreaking investigations featuring Gray's award-winning InvestigateTV unit, plus consumer, health, and original content curated from Gray's 113 local markets. While we have no plans to become a new syndicated programming house, we have been pleasantly surprised by tremendous audience reaction to our InvestigateTV weekend show that airs primarily on Gray's own stations. Despite not airing at a consistent time period or having national promotion behind it, the current InvestigateTV weekend program has been posting ratings that surpass many well-known broadcast and cable programs. That, unlike our weekend program, are cleared in 100% of the country. This tells us that there is an audience for good quality news programming, particularly investigative pieces that highlight otherwise unknown issues and that consistently produce results. Gray will make the new weekday InvestigateTV+ programs available to local television stations owned by other broadcasters as well. Thanks for your time, thanks for your interest. I now turn the call to Kevin. Hi. Thank you, Sandy. In the second quarter, on a year-over-year basis, our retransmission revenue grew 3% as a result of contract repricings at the beginning of 2023. Our subscriber trends are down low single digits on a year-over-year basis, and therefore, essentially matching or slightly beating the industry as a whole. Our network reverse compensation expenses increased by less than our gross retransmission revenue during the second quarter. As a result, our net retrans revenues grew slightly to $159 million in the second quarter. Consistent with prior years, we expect retransmission revenues to decline somewhat between the second and third quarters, as subscriber churn routinely increases when spring turns into summer. Net retransmission revenues, therefore, continue to generate substantial cash flow that helps support the company during off years in the political cycle, as we have this year. We have discussed many times, part of the reduction in broadcast affiliate retransmission revenues are the result of the networks exploiting the FCC streaming loophole to control the distribution of their affiliate signals on virtual distributors. Recently, the four affiliate boards organized the Coalition for Local News. This coalition is an important step forward in the long battle by affiliates to regain control of the distribution of our content and to keep for ourselves the value that the virtual MVPDs are already paying the networks for affiliate signals. Finally, I'd like to highlight just how strong Gray's portfolio of high-quality television stations really is. We recently decided to compare Comscore's total average audience impressions during prime time for all of Gray's television stations to the broadcast and cable networks. In the month of May 2023, the ratings data indicate that Gray's television stations easily surpassed one of the Big Four networks' audience, and were only a bit less than the total impressions logged by the other Big Three networks. This is a particularly impressive feat because unlike the Big Four broadcast networks, our stations are only available in 36% of U.S. television households. In addition, in May 2023, Gray's station's total average audience impressions exceeded the combined audiences of Fox News, MSNBC, and CNN during prime time hours and during late local hours, late news hours. It bears repeating that the audience across Gray's television stations exceeded all 3 news networks combined when our stations are available in just 36% of the country. This concludes my remarks. I now turn the call to Jim Ryan. Thank you, Kevin. Good morning, everyone. Hilton, Pat, Sandy, and Kevin have covered the key highlights of the quarter and the year to date, so my marks are gonna be really very short. Again, on our Q2 results, we are very pleased, and we are exceptionally pleased with the core revenue, up 4% in the second quarter. Turning to our guidance for Q3, again, we are extremely pleased that we are saying, based on the strength of our strong operating performance of our 113 television stations, that we continue to expect core local revenue to be up in the low single-digit range. I will remind everyone again, as mentioned in both the release and in the Q that will be filed shortly, that the anticipated $33 million-$43 million impairment charge relating to the Diamond Chapter 11 rejection of our ACC contract is a pretax, non-cash, and I repeat, non-cash charge, and we have a new agreement with the CW to air certain ACC games which mitigate the loss of the former Diamond contract. All in all, the in and out of all of this is immaterial to this company. Our full year commentary really has not changed since we first gave full year guidance on our fourth quarter call two quarters ago. We continue to expect our core revenue will be somewhere around $1.5 billion, up low single digits. We continue to expect our retransmission revenue of approximately $1.5 billion, again, will be up low single digits. We expect currently our political revenue to be approximately $60 million, which is an improvement of the approximate $50 million range we provided on our last call. Our increase to $60 million is given the given because of the solid first half political revenues that we just reported and in light of the record early presidential spending that we have been booking. We expect our broadcast revenue in 2023 to be somewhere in the range of $3.2 billion. Our operating expenses before depreciation, amortization, gain and loss on disposal of assets, will be approximately $2.5 billion, and that would exclude any non-cash impairment charges that I just discussed. Broadcast operating expenses, we continue to expect to be in the $2.3 billion range. Our reverse network comp, we expect to be approximating $936 million. Our non-cash stock comp will be approximately $5 million. I'm sorry, that's incorrect. Non-cash stock comp of about $20 million, and our non-cash 401(k) expense will be about $10 million for the year. Our corporate expenses will be around $120 million. Cash uses for the year, again, have not changed significantly since we first gave you estimates at the beginning of this year. We expect cash interest of about $435 million. I'll remind everybody that with the 5% SOFR interest rate caps that we put on $6.2 billion of our floating rate debt in the 1st quarter, that we are well insulated from further interest rate increases. With the interest rate caps in place, we are currently at about 95% fixed rates on all of our debt. Cash, cash taxes, again, we expect to be in the range of $38 million-$46 million for the year. That, that is including the benefit of a pending refund of approximately $21 million. Our routine CapEx is still in the range of about $110 million. As you know, our preferred dividends are consistently $52 million a year, and again, our required term loan amortization on the term loan D is an annual $15 million. Generally consistent with what we've said before, we expect our free cash for the year to be in the range of approximately $115 million. At this point, again, I reiterate that we are well positioned midway through 2023 and look forward to a successful conclusion of the rest of the year. I'll turn the call back to Hilton. Thank you, Jim. Well, to summarize, Gray generated free cash flow in the second quarter. The company continues to have a strong liquidity profile with no near-term maturities. As Jim noted, we have an interest rate cap in place to protect us from further interest rate increases on our bank debt. We envision no changes in our dividend policy. We continue to focus on deleveraging our balance sheet. Finally, while we have no term needs to refinance any of our debt tranches, we are encouraged that the trading levels of our securities continues to recover as macroeconomic recession concerns seem to be abating. With half of the year behind us now, it is clear that Gray has begun 2023 in a strong fashion and will finish the year strongly. Our efforts to deliver the content audiences want and advertisers need are evident in our solid ratings, our core advertising results, and our successful strategic initiatives. With the capital investments in phase one of the Assembly Atlanta Studios development essentially complete, Gray's board of directors continue to direct free cash flow to paying down our debt and improving our balance sheet as we progress through the next 18 months of what we expect will be another very strong political advertising cycle. Operator, at this time, would like to open up the line for questions from anyone. Okay, if you would like to ask a question, please press star one on your telephone keypad. Again, to ask a question, press star one from your telephone keypad. Our first question is going to come from Aaron Watts with Deutsche Bank. Aaron, your line is open. Hi, everyone. Thanks for having me on today. A couple questions for you. I'll start with one on core advertising. You grew 4% in 2Q. You're guiding flat to up in 3Q. What are the gives and takes in there sequentially? Just some general softening around the edges, and maybe you could parse out national and local for us and how they're trending relative to the low single-digit growth each had in 2Q. Yeah, so I'll, I'll start and let Jim jump in. It's Pat here. you know, look, I think one factor there is automotive. automotive is up, as you heard, substantially, and it will be up substantially in Q3. We're working against a positive comp, one of the first positive comps we've seen in the better part of 10 years, from Q2 2022, or pardon me, Q3 2022. yeah, that, that's part of it. It's, but it's a overall a very, very positive story. when in Q3, we continue to see, you know, positive growth from home improvement and legal. obviously, automotive, we talked about, and there's a few other categories, you know, including, communications and, and, the lottery that are, that are down a bit. All in all, we expect to see a pretty solid performance in Q3. Yeah, Aaron, as we've commented last several, many calls, on a relative performance basis, local is performing a little bit better than national. We already said earlier in the call that national auto in Q2 was significantly better than overall local. I think looking into Q3, that, that relative performance between local and national is, you know, not changing medically. They're both up. You know, no surprise to anybody that, that the local side is, is doing better. In part, I'd point to, as, as Sandy mentioned, that, or as Pat, Pat and Sandy mentioned, that very strong results and emphasis on the, you know, creating new local direct business month after month. Okay, that's helpful. Maybe I'm parsing too thin here, but we've heard from some others that maybe national, which had obviously been choppy the last several quarters, perhaps turning a corner. Is that anything you'd call out or just it's sort of holding steady as, as you kind of just said? I think you just said it. Yeah, you said it. I think from our standpoint, since our local has been exemplary for several quarters, that relative, you know, the relative split, we think is holding fairly consistent. We're very, very pleased with what they're both doing. Okay. All right, great. Then if I could flip over- Aaron, one other quick add to that is, remember, we've said this many, many times over the years, our proportion of local to core is probably much higher than everybody else's. You know, other people, when, when national tweaks up or down, they may see it faster or see it proportionally more, but because of our local, we just don't see it as much. No, it's good to hear that your local is, is hanging in there. Understood. On the retrans side, it sounds like your underlying subscriber erosion landed down low single digits. Related to how you're tracking versus the industry overall, I would think the general trend we've seen since the pandemic, that of job and population growth over indexing in the Southeast, relative to many other areas of the country, would play to your benefit. Do you think Gray over time can be a net benefactor of that theme, one that may allow you to do a little better on the grocery retrans side, given that population and job shift to an area I consider a sweet spot for you? Hi, Aaron. This is Kevin, obviously. I think that that's a good observation. You know, we don't really. We certainly have a very strong presence in the Southeast. I agree. As we see population moving to the Southeast, that's more homes, it's more households, that's more paid TV subscriptions and more audience. If the Southeast grows disproportionately better than the rest of the country, that's probably gonna benefit Gray a little bit more than others. That's a fair observation. Okay. Okay. All right, last one for me, and, and again, appreciate the time. I heard the comments around security prices rebounding as perhaps some concerns dampen around the macro picture. Jim, last quarter, you got asked about, about your bond prices being at trading at a discount. I think that relationship still exists today. Any updated thoughts on perhaps using that as a lever to help, you know, use cash to deleverage the balance sheet, which I know is a stated goal of yours? Aaron, my, my answer this quarter, just like the last couple of quarters, is pretty consistent. I will place it under the banner of "I can never say never," but consistent with what we've been saying for a while, I, I would say the probability of focusing on our 2026 term loan maturities versus being opportunistic on bond pricing, is probably where we will continue to put our focus again on the 26 term loan maturities. Understood. Thanks again, guys. Thanks, Aaron. Our next question is going to come from Dan Kurnos from The Benchmark Company. Dan, your line is open. Great, thanks. Good morning. Help me, can I just go back to some of the comments around Assembly? I just wanna make sure that we understand that the writers' strike is not causing any necessarily delays in revenue recognition. It sounds like NBC still moving in. Separately, in the release, there's a $90 million in additional cash proceeds from a quasi-governmental authority, and/or limited land sales later in 2023. I don't know if that's part of the value-add model, if that's incremental. Can you guys just kind of talk to that and sort of thoughts on future value unlocked there for the real estate? In terms of revenue, Dan, please know that the vast majority of what we get is going to be rental income from NBCU as they take possession. Literally, a couple of days ago, there were dozens of 18-wheeler trucks that were arriving here from all over the country, bringing in, you know, lights, cameras, grip, stuff, and everything else. That will begin. There are some things that are backed up that are talking to us about also leasing the studios that we have kept. I believe that we will start seeing revenue. I know that we will start seeing revenue in the fourth quarter of this year. With regard to the reimbursement, there is a community improvement district that we have that overlays the entirety of the project. Both Pat and I are on that board, it has north of $100 million in liquidity in the CID. As issues that are public, i.e., streets, utilities, various other things, as those are complete and then are assumed by the local municipalities, Gray is reimbursed from the CID proportionally. So I think we've received about $39 million-ish year to date, and we anticipate more as things kind of mature out and, and get completed. Got it. That's just incremental reimbursement. That has nothing to do with, you know, additional studio leasing or, or sale, leasebacks or any other incremental value unlock you could achieve with the real estate. Correct, Hilton? Correct. That is purely a balance sheet activity. It is not a P&L activity. Okay, got it. Thank you. Then just going back to the guide for a second, Jim, I just also want to double-click on maybe lapping the Meredith station acquisitions. I know you've said we expect the goodness as it's been, so you guys have outperformed the broader industry by a few points now on core. Is that something else that we should be factoring into kind of the Q3 guide, that sort of goodness starts to fade a little bit? We closed two years ago, not one year ago. Yeah, I mean, we closed on Meredith in Quincy two years ago. We said consistently, starting sometime last year, through every call since then, that we had thought that there was revenue upside in, especially in certain Meredith markets. We have consistently said for several quarters that we are reaping the benefit of that assumption, that that assumption was never into the synergies of the deal we announced. We see continuing benefit from the Meredith markets. They are making tremendous progress. That's in part why we outperformed, I think, the industry in Q2, not by a few points, but what I'm reading is by probably close to 8-10 points. Please give us credit that's due. You know, that will continue for the reasonably foreseeable future in garnering benefit. We've, and we've commented that that's both on the local side and on the digital side, also to some extent on the national side. Also, the entire rest of the portfolio is performing very strongly. Part of it's the Meredith revenues upside story that we've been talking about for a while, but the rest of the portfolio is doing very well, too. Certainly wasn't a negative comment. I'm just trying to understand any lapping elements going into Q3. No, I, I didn't take it as a negative. I just want to get some credit. Fair, fair enough. Fair enough, Jim. Last one for Mr. Kevin, obviously, just a question on retrans. Just want to make sure that the Q2 number, is that clean? Is that beat mostly because sub churn came in below what you expected, or was there any kind of true-up noise? I know most of your trips happened in Q1, so I want to make sure. Our retrans, our gross came in $1 million higher than our guide because the subs did not decline as much as we had modeled. We have been attempting to be particularly conservative in all of our guides over the last now year, since we were a little surprised on on political last fall. We are again, we're trying to model things on the conservative, so that we don't have any negative surprises out there. Yes, our subs came in a bit better than expected. Got it. All right, cool. Thanks, everybody. Appreciate it. Thank you, Dan. Our next question is going to come from John Dixon with Artemis Investment. Your line is open. Good morning, Hilton and your team. Good morning. I just wanted to tell you as an investor in your company, I'm very, very impressed with your portfolio and the leadership of your team. One of my questions, one of my concerns from a long-term picture is your debt load. I just wanted to, to question you guys. Can you give some more insight into what you're doing to, to pay that debt load down? Well, John, let, let me begin, and then I'll let Jim follow up with all that. We have had a pretty direct communication with the street and all of our investors about what our intentions were to do, and that was to grow the size of our portfolio. We have allowed our debt ratio to grow into the 5 range, and then we have quickly paid it down. That happened after the acquisition of Schurz. It happened after the acquisition of Raycom, and we're in the same situation now. Our percentage ratio, in my judgment, is really not totally accurately reflected because we have such a high-quality portfolio of television stations. During a political year, we have a very strong, proven record of over-delivering on political. As you measure the ratio, the quarters that we had a lot of big political rolls. We have paid down about $600 million in absolute debt over the last several quarters, and that is our intention to do that going forward. I think that you will see us continuing to reduce our ratios and our absolute debt as well. Well, thank you, Hilton, and that's really the only question I had. Lance, I'd just like to leave it as I really appreciate the leadership of your team. I think you're doing well, and I'm very impressed with the quality of your portfolio. Thank you very much. You're awfully nice. I certainly appreciate it. Everybody does, John. As a reminder, if you would like to ask a question, please press star one on your telephone keypad. To ask a question, press star one on your telephone keypad. Our next question is going to come from Steven Cahall with Wells Fargo. Your line is open. Yeah, maybe first, just to pick up on the last question. It would be great, Jim, if maybe you could just walk through some of the puts and takes, to get to free cash flow available for debt pay down this year. you know, I know you talked to a free cash flow number, but between maybe some of the dividends and the CapEx, how much cash do you think you'll be able to use for debt reduction this year? I assume that's gonna be a big number next year. you know, any kind of look on the amount of debt you might be able to bring down, with the big political year coming next year? Steven, I, I said our free cash, as we define it, would be in the $150 million range. As you know, we define free cash before our common dividend, which is currently running about $28 million a year. It would also be before the expected net investment for a full year 2023 in the Assembly project. That's roughly $55 million on a net basis on a full year. So we will be paying down some debt late this year. You are absolutely right, and Hilton basically the same thing a couple of minutes ago, that historically, as you know, in political years, we perform exceptionally well and have for longer than we can remember, out indexed on a per capita basis, political revenues from anybody in this peer space. We see no reason why 2024 won't be similar. We are certainly not gonna put a full year estimate on 2024 political, as you can imagine, only to say it's going to be a large number. Political comes, cash in advance, so it, for all intents and purposes, goes direct free cash flow. We will be able to make a significant payment of debt, especially the latter part of next year. I'll remind people that, for every political season, except for 2022, and it changed slightly in 2022, but history has said that about half of our political, and in 2022, it was slightly less than half of our political. Anyways, the vast majority of political shows up in the fourth quarter of the year, which in 2024, will allow us to make a significant debt paydown. You can look at our investor deck and see what we've done in prior political years to. I can't guarantee the past is the future, but if you look at the investor deck and see what we've been able to do in free cash in political years, I think it will be very instructive to everyone. Thanks, Jim. Maybe to follow up on that political theme, you know, this could be for, for Jim or for Pat. I think your guidance for Q3 in political is lower than what you did pro forma in 2019. Is that just some conservatism after some of the more dynamic nature of, of political spending? Maybe related to that, Pat, how many political impressions do you pick up in core in the back half of the year? Because I imagine that's a pretty big tailwind, given the level of crowd out you had last year. Yeah, it, it'll be impactful in September or October in terms of crowd out. You're right, we are being conservative, you know, and for obvious reasons. You know, obviously, the former president is a huge wildcard, and, you know, his, his situation, I think, sort of dictates, conservatism. It, it could turn out significantly better, or it could, you know, it, it could fall into a wide range. You know, I, I, I think, particularly in October of last year, there was a significant, sort of crowd-out factor, September and October? Yeah, obviously. If you look at. Steven, again, if you're comparing to 2019, yeah, we're probably a little more conservative. As Pat said, there's probably a reason to be. We've obviously had an extremely strong first half performance. you know, we started the year with a political guide. I'd have to go back and look, but I think it was closer to $40 million than the current $60 million guide. Certainly, our expectations have been improving, improving as we've gone along. you know, I think, again, keeping in mind that this year is an, except for the early, president, 2024 presidential money, it is a traditional off year. The traditional off year is progressing kind of like we would expect it to. I don't think any of us have seen any major red flags yet, there. As Pat said, the, the wild card in political, whether it's Q3 or Q4, is going to be what happens with the early 2024, especially the early primary states. We certainly expect that we will, we will be getting more money on the early primary states as we go through the latter part of the year because we're very strong positioned in those states. We'll kind of let the numbers take care of themselves. You know, we -- all in all, for a non-political year, and we've commented about, you know, unimaginable early political spend in, in 2023, going into 2024 for the 2024 presidential cycle. At the end of the day, we think pre- political, for 2023 as an off year, is going to take care of itself. Yeah. Thank you. Maybe just the last one for, for Kevin. We, we do kind of our own subcounts and forecasts as well, and your low single digit number certainly sounds better than ours. I think some of the delta may be Paramount+ and Peacock, which I know you do get paid on for your stations as well. Number one, is that correct in terms of the way you're doing your subcounts? Is there any way to think about the impact of Paramount+ and Peacock within that low single digit rate that you're at now? Thank you. Steven, we have always, always, always included every distributor who pays us a fee for the linear distribution of our signals as a distributor when we do subscriber counts. We have always counted a subscriber with Paramount+, and before that, CBS All Access. When we count subscribers, we are getting paid a monthly fee per sub for the 24/7 distribution of our signals, so we have never excluded them, and I don't see a reason to exclude them otherwise. In terms of magnitude of Paramount+ and Peacock, I'm concerned about giving that percentage out. We've been asked, I think, every call for that. We're not supposed to be disclosing the sub, sub numbers for any distributor, and we provide the combined number. I think it provides a fairly easy roadmap for people to figure out what Paramount+’s numbers are, and we’re not prepared to do that. We are the biggest CBS affiliate, and so you can presume that that’s between Peacock and Paramount+. Paramount+ is a very large part of that, and Peacock is a fairly small part of that. Great. Thank you. Uh-huh. Thanks, Steven. Our next question is going to come from Nick Zangler with Stephens. Nick, your line is open. Hey, everyone. Thanks. First off, man, do I wish I received compliments like, you just received from the Artemis investor there. Aren't you going to follow up? I mean, come on. It's, it's always nice to hear and nice of them to do so, I'd just say. If you, you know, moving on to the, to the questions here. Just, if you strip out auto's contribution to growth in the quarter, which I imagine this back-of-the-envelope math is pretty sizable, assuming, you know, autos may be 20% of the mix at this point, and obviously growing 20%. Just curious how you'd gauge, I guess, local performance in the quarter and, and the outlook, stripping out auto, and, and if there's really any other verticals to call out that, that is contributing to, to the growth outlook and commentary. We've said consistently for multiple quarters, home improvement has continued to be very strong quarter after quarter. Q2 is no different, and our expectations for Q3 for that is not different as well, based on a long track record. It is, we've also commented for the last, oh, at least year, if not longer, legal has done exceedingly well. You're right. Part of it is a story about auto rebound, which we had said for a long time would eventually happen, and guess what? It did. There's also, again, other bright spots. Some categories that you would expect, like, you know, fast food, probably a little challenged, but that's been challenged for longer now than I can remember. No surprise there, and things like that. Again, I think... you know, that new local business development, month after month, quarter after quarter, is, I mean, that's, that's basically not auto, that's, that's mom and pop, you know, growing, growing business the good old-fashioned way. Mm-hmm. Got it. Well, that's helpful. Then, I did wanna talk on the sports rights, 'cause you guys, you guys kind of brought it up, but basically, I, I'm wondering if you're able to provide really any details on the structure that you've got with the Phoenix Suns and Mercury. Perhaps alternatively, you, you spoke to just many different types of structures these sports deals can take. I'm wondering maybe if you could just actually just walk us through that. Like, what, what types of structures do you see? Just like whether or not there's typically fixed payments, you know, potential advertising, rev share agreements, just anything to kind of help us understand what these structures look like as potentially more are, are to be announced as we push forward. Yeah. I'll start. It's Pat. There are, you know, an infinite number of ways you can structure these deals. It, there's variances in distribution, whether it's all over the air, whether it's some, over the air, some cable, some direct to consumer, some over the air with direct to consumer. There's a lot of ways that can be played. There are differences in the ways the inventory gets sold. You know, does the rights acquirer sell the inventory? Does the team sell the inventory? Who does the production? Is there pre and post? The, there's a just a ton of different variables, that impact, you know, those types of discussions. And I think we're at a point where all, you know, that's sort of starting to get, you know, figured out. It's a very fluid situation, and, and, you know, as is the Diamond situation, and, and we're just monitoring where we need to monitor. We're acting where we need to act. But we do believe there, there will be opportunity there. Got it. Then, all right, last, last one from me here, just on, on political, given, I think some estimates are coming out, maybe, maybe $11 billion in this cycle, maybe $12 billion for the cycle. Obviously, the potential for there to be some pull forward, I guess, into 2023. As you look across your markets, are there any maybe worth highlighting where you are seeing political ad spend at this point in time, significantly above or, or just different from what you would have seen at this point in time in the last presidential election, that might be a, a leading indicator of just, you know, how large this, the spend might be as we think about the whole cycle? Thanks. Short answer is no. People aren't really advertising outside of the four early primary states to any noticeable extent. I mean, look, it's still getting any money now for presidential primary is still a big deal, that's why Iowa is doing really well. The other states that are generally performing well are, governor's race in two states, state House race in Virginia, and then there's some issues that have popped up from time to time. Presidential primary money is, has historically been a, a, in 2019, it was a fourth quarter event. It's now happening a little early, but it's happening in the primary, primarily Iowa for us. Got it. Thanks, guys. Appreciate it. Thanks, Nick. As another reminder, if you would like to ask a question, please press star one. Our next question is going to come from Alan Gould with Loop Capital. Your line is- Thank you. First question, Kevin, can you go ahead and drill down a little bit more about what the affiliate boards are doing to negotiate to get the virtual distribution? Any benchmarks we should be looking for? You're trying to literally change laws. What's going on? Can you just give us some more details there? The focus of the Coalition is to encourage the FCC to reopen, basically to request comment on a 2014 rulemaking that was asking whether the FCC should update its rules to reflect potential arrival of virtual MVPDs. The comments submitted in 2014 are obviously stale, in 2023. We are simply at, you know, at this point, the ask is for the FCC to reopen the proceeding and let people tell the FCC what's going on. That's, that's literally where we're at. There has been support, both sides of the aisle in the Senate, supporting the FCC to, again, just open the window and let the FCC hear what's going on, and what has developed in the 9 years since they asked questions about an industry that literally did not exist at that time. Any timeframe when we should hear whether or not the FCC chooses to open that window again? It's entirely up to the chairwoman, so I, I, I don't, I don't know. Entirely up to the chairwoman. Thanks. Jim, two questions for you. Easy one, is that free cash flow estimate, $115 million or $150 million? On Diamond Sports, is that all behind us now, or is there any potential liability remaining? Free cash, as we define it, is approximately $150. Mm-hmm. The issues with the Diamond bankruptcy and the impact on our historic agreement is behind us. Obviously, as we said, that technically that's a Q3 event, but you've got the numbers there, but it is all behind us at this point. As we've said, we, as a result of the Diamond rejection of the contract, we were able to put a new contract in place with The CW or ACC Games. I would say that clearly, the net impact on the company with the ins and outs as we move forward, is going to be an immaterial, a significantly immaterial number. Okay, thank you very much. Thank you, Aaron. Our next question is going to come from Craig Huber with Huber Research. Your line is open. Thank you. I wanted to ask, first off, obviously, your core advertising numbers are much, much better than your peers out there. I wanted to give you a chance to just explain why you think you guys are outperforming your peers so much out there. I mean, we all have our thoughts on, but I'd like to hear your bullet points on why you think you're outperforming so much on core, please. Well, this is Jim. I'm going to start, and then I'm gonna let Pat and Sandy jump in. I'm not going to comment on the peers, only to acknowledge that, that obviously the results that we published today, seem to be leading the peer group in core advertising, both in the quarter and, and year-to-date. You'd have to ask them, I respectfully, I'm, I'm not going to comment on a peer. You know, you should ask peers what why they think their results are their results. I certainly cannot, not answer for them. Answering for Gray, I, I think it goes back to what we have been saying literally for decades. You know, Q2's results, I think, again, as in many times in the past, prove it. We have the preeminent portfolio with asset quality in the television broadcast business, and we have had that for decades. We have always had a focus on strong local operations with an exceedingly lasered focus on strong local news operations. When you've got a strong local news operation wrapped around a strong, larger overall television operation in most of the 113 markets you operate in, you have a chance to consistently form well, to exceedingly well, to outperforming the peer group. What we're saying in this quarter is really no different than what we have said lots of times in lots of other quarters. I would, I would add on, that's Pat. I would add, at the risk of being a little bit repetitive, we talked about our new local direct efforts. You know, we're, we're packing on north of $30 million a quarter in new business every quarter, and that's growing. We talked a little bit about the Meredith impact, and, and which we telegraphed back when we closed on Meredith. We thought there was revenue upside there, and there is, and you're seeing the impact of that. Finally, again, something I've talked about quite a bit on previous calls, our training efforts and our category focused approach, that's paying great dividends. We have a really well-trained sales staff, and we invest in category experts to move our business forward. I, I think you're seeing the result of all that right now. My second question, if I could, your, your comments earlier about the Phoenix Suns arrangement for games on your, on your stations there. Just discuss, if you would, what percent of the games or number of games are you anticipating, showing on your television stations in the season? We would guess it's the number's flexible, depending on how many games go to the networks, but historically, somewhere on the order of 70 games. That's a lot. Okay. Yeah. Obviously, you're trying, you're trying to do more of these in other markets if, if the opportunity arises, I assume, because economics must be quite favorable to you. Yes. Okay. Then also on your local news ratings, early morning news and, and maybe late night, can you give us a sense of how those rating trends are doing? If you could separate the two, early and late day. Yeah, our, our... You know, look, we have a bunch of good television stations, and, you know, I can't sit here and tell you that there's this dramatic spike, up or down. The numbers are, are large and continue to be large. You know, morning news, there was a, you know, a little bit of, a little bit of noise in morning news numbers around COVID. You know, but we're back, sort of, you know, returned. Any thoughts on that, Sandy? Yes, it's kind of, we are back to normal there, but we have seen in some of-- especially in some of our larger markets and quite frankly, some of the former Meredith markets, where we've seen our audience in, in the morning news grow significantly, and we're very, we're very pleased with that. The same, I would say, for late news as well. We're seeing that in several of those markets. Sorry, are you suggesting maybe versus the pre-pandemic 2019 levels, the ratings are, say, flatter up? No, we're just saying there's been a, a bit of a normalization, and, you know, we're, we're also saying in the Meredith markets, which are the larger markets we have, we're seeing audience growth in key, in a number of those markets. Okay, my last question, if I could. This ongoing Hollywood strike, if this thing continues here, do you anticipate any negative ram- ramifications for your TV stations here? This is Jim. I'll start off, Pat or Sandy are welcome to join in, we don't see that as a significant headwind one way or the other. Obviously, it will have to a modest degree, we think some impact on prime time as we move through the fall. Obviously, it'll all depend on how quickly the strikes are settled. As Hilton said, we hope that they're settled amicably for all parties concerned sooner than later. You know, any strike eventually gets settled. We don't Given the limited amounts of inventory that we have available to sell prime time, the impact to us as we move through September and fourth quarter is not significant at all. I mean, we've seen it before. It, it's not a big deal, given, again, you know, you know, the, the local broadcast niche that we occupy. We are, we are not a network, so, you know, it's not a super big deal to us. Great. Thank you. Yep. One last, Jim Goss. Our last question is going to come from Jim Goss with Barrington Research. Your line is open. Hey, thank you. One more on the sports programming you've been talking about with Phoenix and the ACC. You're making compelling arguments for getting, getting involved. I do understand it's early stages in trying to figure this all out. I'm wondering how far you do plan to take this, how extensive this effort might be. I assume there's pretty good competition for those rights locally. My comment on that. The big issues always seem to be, how does it fit into network scheduling? Because you're, you know, in all of the areas where you have a network feed, it would interrupt prime time in a lot of cases. I'm just wondering how, how it blends with that sort of situation. Yeah, sure. I'll, I'll start, Jim. It's Pat. We have a number of independent television stations in larger markets. Phoenix happens to be one of those markets. In markets where we have these you know, these independents, it's not a problem. It's, it's a great opportunity. I, I think what you'll see on affiliated stations is use of the subchannels to carry these games. There's not just, you know, the CBS affiliate, but there's other, other channels that we air where it would be there'd be no issues carrying, you know, pro sports games. There's you know, it's gonna vary by market, but particularly in larger markets where we do have independents, which include Phoenix, Atlanta, Portland, we have two signals in Cleveland. There are, there are great opportunities and there should be great opportunities in those markets. Okay. One last thing. After years of scaling up your platform and developing Assembly Studios, and a variety of other things, do you, do you have any further growth ambitions beyond focusing on your high-quality expanded platform, say, for the other 3%, and getting to the cap limit? Or are you sitting still for a while and just evaluating what you've been undertaking? Jim, with regard to the last 3 points of the cap, we have said consistently for a long time that there are no must-have stations left, in our opinion, over time. I stress over time, because clearly there's absolutely nothing today. Over time, if the right thing came along at the right time when, you know, we felt good about our leverage. I mean, say it differently, when our leverage was lower, would we consider some transaction or a couple of transactions to get the last 3 percentage points? That's a definite maybe, but it would depend on the circumstances of the time, the outlook we have as a company, the price, our leverage, because, again, there is no must-have left in our view. We have been very clear on Assembly that the phase one studio project is essentially completed and will wrap up its completion over the next few months. We have said consistently that there is remaining acreage that remains to be developed. And in Hilton's opening comments, he talked about that, that that's a long-term project for the company that we'll be exceedingly thoughtful about. Other than that, I think we've been very clear for a long time that we, we view Assembly Studios as a complementary business to the core operations of the company. We've said for a long time that we, we are happy to entertain when it makes sense to this company, further acquisitions of either, again, potentially core business in TV, although those opportunities are gonna be exceedingly limited, or other complementary businesses. It has to make sense to us, and we're not gonna go off and, you know, completely change what we have been doing for many decades as far as our core business and our core philosophies. Okay. Thank you very much, then. All right. Thank you, Jim. There are no more questions in queue. I'll turn it back over to you for any closing remarks. Thank you, operator. Thank all of you for joining us this morning, and we look forward to talking to you next quarter. Have a great weekend. This concludes your call. You may now disconnect.