Welcome to Gray Television third quarter 2023 Earnings Call. I will now turn the call over to today's speaker, Chairman and CEO, Mr. Hilton Howell. You may now begin. Thank you, operator. Good morning, everyone. As our operator mentioned, I am Hilton Howell, the Chairman and CEO of Gray Television, and I want to thank each and every one of you for joining our third quarter 2023 earnings call. With me today in Atlanta are all of our executive officers, Pat LaPlatney, our President and Co-CEO, Sandy Breland, our Chief Operating Officer, Kevin Latek, our Chief Legal and Development Officer, and Jim Ryan, our Chief Financial Officer. We will begin, as usual, with a disclaimer that Kevin will provide. 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, operating cash flow, free cash flow, 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. In our earnings release, as well as on our website, our reconciliation to 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. The company undertakes no obligation to update these forward-looking statements. I now return the call to Hilton. Thank you, Kevin. Gray Television began 2023 by predicting that we would continue to operate prudently and to grow our business positively. With 3 quarters behind us and another strong guide for the fourth quarter, it is now abundantly clear that Gray Television is delivering for 2023. In the first half of this year, we posted year-over-year growth in core revenue and in retransmission revenues, and in growth in political advertising revenues over 2019, the last year before a presidential campaign. The third quarter of 2023 continued this trend with strong year-over-year growth in core revenue and retransmission revenue, and a four-year growth in political revenue. Our guidance for the fourth quarter illustrates that we currently anticipate that these trends will continue throughout the rest of this year. In fact, our guidance today increases the full year political advertising total to $80 million from the $60 million full year guide that we offered in early August. We announced a number of exciting developments in the third quarter that Pat and Sandy will address in a few minutes. However, I'm personally pleased to share 2023's singular, most historic achievement for our company. That occurred in September, when Gray Television turned over to NBCUniversal, all of the soundstages, offices, mill space and warehouses, parking and security facilities in the Assembly Studios project that we constructed. The facilities are world-class and impressively constructed in less than 16 months from the announcement of our long-term lease and management agreement with NBCUniversal. We anticipate the actors strike, which we hope will end soon, and our venues, which will host their first film and television series and live television productions, should begin shortly. We do not know exactly what productions will be coming to Assembly Studios, but we are certain that the thousands of creative workers who soon will be working at Assembly Studios will prove to all what a wise investment this project will be over the years and decades to come. In 2024, Assembly Studios will no longer require significant capital investments by us. Instead, Assembly Studios will be generating cash revenues from our leases to both NBCU and to other parties of our soundstages and related facilities that Gray retains. As we now look ahead to completing 2023 and beginning a new political cycle in 2024, we could not be more excited about our company's future. Our TV stations continue to perform at the top of their game, while our value is reaffirmed daily by audiences, clients, political campaigns, sports teams, sports fans, the broadcast networks, and distributors. Next year will see us continue to build on the consistent and stable and prudent management that Gray has demonstrated before, during, and now after the pandemic. I'd like now to introduce Pat LaPlatney, who will add more color to our operations. Pat? Thank you, Hilton. Gray's television stations continued executing well in the third quarter of 2023. We again grew year-over-year core revenue, and expect that, expect that momentum to carry us through to the end of the year, as Sandy will explain next. We're continuing to see strong growth in our digital platforms and digital sales. In the third quarter, we set a new all-time record of 225 million video plays across Gray digital properties, which was a 45% increase over the third quarter of 2022. In September, we passed 630 million video plays on Gray-owned digital platforms for the year, which is the previous record for a full calendar year that we set in 2022. While we do not break out digital sales in our financial results, I'm pleased to report that our stations are continuing to grow digital revenues at an annual double-digit rate. Meanwhile, Gray continues to expand its Connected TV footprint. We currently have a few dozen FAST channels of our local TV stations carried across Samsung TV Plus, Tubi, Xumo Play, and Vizio WatchFree. In the coming weeks, additional channel launches that are in the works now could nearly double the total number of FAST channels that our stations have on CTV platforms. The broadcasting industry continues to make progress rolling out next-gen technology. During the third quarter, the main broadcast stations in New York, Philadelphia, and Minneapolis began broadcasting their programming in the ATSC 3.0 standard. Other large markets, including Chicago, will soon follow. While Gray does not operate in those markets, we are continuing to roll out the new technology in our markets, too, including, most recently, Reno, Nevada. As of today, Gray has participated in next-gen launches in 27 markets. The industry's full commitment to next-gen, including by the network O&O stations in the largest markets, will allow the industry to deliver programming and services to over 75% of U.S. households within the next few months. We believe that milestone is actually a tipping point, and we should begin seeing apps and innovative uses of next-gen technology rolling out next year. We continue to pursue local broadcast packages for professional basketball, hockey, and baseball. This fall, we're broadcasting local games for the Phoenix Suns throughout our Arizona footprint. We're also broadcasting games from the Atlanta, Las Vegas, and Portland, Oregon, NBA G League teams on our local stations in those markets. If and when, if and when the Diamond Sports bankruptcy court permits additional teams to negotiate with local broadcasters, we'll be ready in several markets to provide compelling opportunities for teams to expand their reach and grow their fan bases by partnering with their strong local TV stations in their home market and beyond. We're cautiously optimistic that Gray will have some exciting announcements in this space prior to our next earnings call. In the meantime, we've launched Peachtree Sports Network on our stations in Georgia. We've also launched similar statewide sports channels across our stations statewide in Arizona, Connecticut, and Nevada. These channels offer live, local, and regional, professional, college, and high school-level sports from their respective states, along with other sports-themed programming owned by our production companies, Raycom Sports and PowerNation Studios. We believe these networks and a couple of others that we may launch in the near term, also provide a foundation for Gray to secure more professional sports packages as they become available over the next several months. Yes, yesterday, Circle Network, which is a 50/50 joint venture between Gray and Opry Entertainment Group, announced that it will shut down at the end of this year. The Circle Network's country lifestyle content was very good, and it was well-supported by the country music industry. Each week, Circle provided more original programming than nearly all other cable and multicast entertainment networks. It also achieved significant broadcast and MVPD clearance throughout the country. Unfortunately, for a variety of reasons, Circle did not have a clear path to meet the financial expectations that our partner and we required for the venture. Accordingly, we took an $8.3 million pre-tax charge in the miscellaneous expense line of the income statement in the third quarter of 2023 for the pending shutdown of Circle. In a related development, a new multicast company launched yesterday that will fill essentially all of Gray's channels that currently carry the Circle network. The new company, Free TV Networks, or FTN, is founded and led by Jonathan Katz. Jonathan is a pioneer of multicast networks who partnered with Raycom to launch Bounce Network and other diginets before Scripps acquired Katz Networks. With FTN, Jonathan is partnering with Warner Bros. Discovery, Lionsgate, and Gray Television to launch this business. The first two networks will go live on New Year's Day, and we are particularly excited to reunite with Jonathan Katz in the diginet business. I'll close with a quick follow-up on our Telemundo initiative. Recall that we acquired Telemundo Atlanta in spring of 2022, and soon thereafter announced that we would launch the first-ever local Telemundo affiliations on Gray's TV stations in 22 markets. Today, we have Telemundo affiliations in a total of 42 television markets with an estimated Hispanic population of nearly 4.5 million people. These stations, especially in Atlanta, work closely with our existing local news and sales operations to expand the audience for our news and sales opportunities. In terms of sales, our Telemundo group of stations are performing well. The group, led by our Atlanta Telemundo station, collectively posted double-digit increases in ad revenues in the first three quarters of this year compared to the first three quarters of last year. We have high hopes for our local Telemundo affiliates, and they're off to a strong start with very talented leadership. I now turn the call to Sandy. Thank you, Pat. Across Gray, we see the current advertising environment as particularly stable. Our core revenues continue to grow, and our political revenues continue to impress. In terms of our core business, the automobile advertising category continued improving in the third quarter with an 18% year-over-year increase overall and a 26% increase in the national automobile ad category. Home improvement also continues to do very well. The biggest decrease came from sports gambling, which was expected, as that category cycles through heavy market share spending at launch and then steps down to maintenance level spending. New businesses from local customers who previously did not advertise on our platforms continued to exceed our expectations. In the new local direct grew 9% on a year-over-year basis. In the new local direct grew in excess of 15%, and in the just completed new local direct grew 16% over the third quarter of last year. As we said on prior calls, we new local direct business is our best leading indicator of the economic health of our markets, and we are thrilled to see local businesses clearly exhibiting real signs of strength. Political advertising has been very strong the first three quarters of 2023. As mentioned previously, our guidance for full year political revenue is now $80 million, which is up 33% from the $60 million full year guide from our August earnings call. This strong result reflected significant spending in the governor's races this year in Louisiana, Kentucky, and Mississippi, which we believe will exceed presidential primary spending this year, as was also the case in 2019. We also had a good deal of spending on Virginia State House races, the Wisconsin Supreme Court races, and a number of ballot initiatives. Our strong political revenue flows from our leading news operations, and Gray won five national Murrow Awards in September. The impressive achievements were attained by our news professionals in St. Louis, Missouri, Bryan, Texas, Augusta, Georgia, Baton Rouge, Louisiana, and Roanoke, Virginia. Gray stakeholders should be particularly impressed with the incredible work that our Hawaii News Now team demonstrated in the aftermath of the horrible wildfires this summer, and especially the tragedy of the fire that destroyed the town of Lahaina, Maui, that personally impacted many members of our Hawaii team. In the three weeks after the Lahaina fire, Hawaii News Now aired 450 unique linear hours of dedicated news coverage and seven fundraisers. The team also produced an amazing 33 hours of Maui-focused specials for broadcast television, CTV, and podcasts. Hawaii News Now demonstrates, again, the critically important and valuable service that local broadcasters provide to local communities throughout the country. In terms of programming, we launched a new daily news show called InvestigateTV+ on September 11. The program leverages one of the largest collections of investigative journalists in the nation to provide even more investigations that not only uncover problems, but reveal and often lead to solutions. The initial ratings from the first few weeks are impressive. In many markets, exceeding the ratings of syndicated talk shows and court shows that previously aired in those time periods, which confirms that local audiences are looking for something different and something impactful from their local stations. We made a big investment this year to fill out Local News Live, which is our 24/7 OTT news network that originally aired curated news content from across our 113 markets. This year, we have added exceptional talent and began programming premier news hours out of our Washington, D.C. bureau. This fall, several of our stations replaced syndicated programming with the LNL on their broadcast schedule, and the response from the audience has been just as encouraging as our initial success with InvestigateTV+. The lesson from both of these initiatives is that Gray can leverage its leading local news and investigative teams into standalone properties that better serve broadcast and OTT audiences, while further reducing our dependence on third-party content providers. I now turn the call to Kevin. Thank you, Sandy. In the third quarter, our retransmission revenue grew 3% on a year-over-year basis as a result of contract repricings at the first half of 2023. Our total subscriber trends continued to be consistent with the broadcast industry as a whole, which makes sense given that Gray's portfolio is now more or less evenly split between large markets and medium-sized markets. Our network compensation expense in the third quarter was essentially the same as both the first and second quarters of 2023, and is projected to remain flat in the fourth quarter, despite this summer's new network affiliation with CBS for the former Meredith markets, plus the Fox annual escalator hitting, as well as the renewal and repricings of all of our CW affiliation agreements in the legacy Gray markets. We will be renewing the bulk of our traditional MVPD retrans contracts next year, covering about 38% of our MVPD subscribers in the first quarter and 23% of those subscribers in the second half of 2024. Last month, we provided our views on the network and retransmission landscape and investor deck, attempted to dispel what we frankly believe was unfounded negativity in some quarters. In that deck and in a number of investor conferences and meetings since early September, we explained why we believe the broadcast retransmission rates remain significantly undervalued and have new momentum for growth going forward. Our main themes support this conviction. First, broadcast programming, especially local news and professional sports, remain tent-pole programming. Viewer impressions are clearly increasing on streaming platforms, but those impressions are mostly coming from cable channels, leaving total broadcast ratings generally stable over the last few years. Broadcast programming is not only very popular, but broadcast stations also have among the most intense and loyal viewers of any programming channel available anywhere. Second, broadcast affiliates are aligned with the broadcast networks of protecting the network affiliate distribution model and our collective stations' abilities to grow retrans revenue. The networks, in short, need their affiliates to survive, succeed, and flourish in order to profit from the unparalleled reach provided for the network's advertising business and to profit from the affiliates' own retransmission revenues. Third, the Charter-Disney deal structure confirmed that most premium content, such as ABC and ESPN, will continue to be key drivers of value for distributors. That deal also provides new ways to help lessen pay TV subscriber churn through DTC offerings and apparently additional flexibility and distributors' ability to tier cable channels, both of which should make the basic cable bundle more attractive to more households. Finally, secondary cable channels, secondary cable networks, and regional sports networks are experiencing the undeniable decline in ratings, fees, and industry support. As they collect fewer fees and lose distribution, premium content can be better compensated by simply reallocating distributors' programming budgets away finding channels in favor of the increasingly important premium content, and especially to broadcasters who are still paid a fraction of the value that we deliver to the pay TV bundle. These industry-wide trends have been highlighted by our peers recently, and we believe these trends will be validated by all broadcasters as we continue to successfully negotiate traditional MVPD retrans agreements in the coming year-end crunch. In terms of Gray in particular, I encourage all of you to review the last 2 pages of our recent investor deck that is posted on our website and was distributed via a press release last month. Therein, we demonstrated through Comscore ratings data, the incredible popularity of Gray's local newscast during a recent ratings week in September 2023. The data illustrates that Gray's local newscast deliver more household viewership in the market than the total of all network prime viewership on NBC, CBS, ABC, and Fox combined. Gray's local newscast deliver more viewership than the total of all NFL games on ABC, for Monday Night Football, CBS, Fox, and NBC combined. Gray's local newscasts deliver more viewership than the total of all 3 major cable news networks combined. Finally, Gray's local newscasts, by a factor of nearly 6 times, deliver more household viewership than the total of all 15 top cable sports networks in their markets. In conclusion, our local community, as well as our network relationships, remain mutually strong. Meanwhile, retransmission revenue is continuing to grow, and its prospects for future growth remain as bright as ever. This concludes my remarks. I now turn the call to Jim Ryan. Thanks, Kevin. Hilton, Pat, Sandy, and Kevin have covered the key highlights for the quarter and year-to-date, and as such, my remarks will be very short. First of all, for Q3 2023, again, we're very pleased with our Q3 results, especially with our core revenue up 1% in the third quarter. For our fourth quarter guidance, we are again very pleased that we're seeing continuing strong performance demonstrated in our core advertising, and we expect that to be up low single digits. We've heard some chatter that some people thought the expense guide for Q4 was a little heavy, so let me address that. On the broadcast line, there's about $15 million-$20 million of discretionary compensation expense. We don't actually accrue for that until we're confident that it's going to be paid out. So that expense falls into the fourth quarter of the year. So you can think of it more as a timing difference. Actually, if you look at our full year guidance for broadcast expense, going all the way back to our February call, when we first gave out 2023 full year guidance, we said broadcast expenses would be about approximately $2.3 billion. As of today, based on our year-to-date results and our Q4 guide, it would say that our broadcast expenses are tracking to end up somewhere around $2.275 billion. So all in, we've been very consistent. Same with the Q4 corporate expense guidance. There's about $7 million-$10 million of professional fees that were falling into the fourth quarter. Again, if you look at our full year guidance, going back to February, we said, corporate expenses for the full year would track to be about $120 million, and that's consistent, with where we're tracking again today. Moving on to the rest of the full year expected results. Our total revenue will be approximately $2.75 billion. I'm sorry, let me clarify that. I misspoke. Total revenue of approximately $3.275 billion. Again, it's expected to be approximately $3.275 billion. Core revenue of about $1.51 billion, retransmission revenue of approximately $1.53 billion. Again, both of those line items are up in the low single digit area, and we're very pleased with those results. Well, political revenue, we've moved up to $80 million for the year from our previous guide of $60 million. Our total broadcast revenue, again, is still approximately $3.2 billion, which is consistent with what we've said every quarter since February. Broadcast expenses will be approximately $2.275 billion, with network compensation of about $938 million, non-cash stock comp of $5 million, and 401(k) non-cash expense of about $10 million. And I've already mentioned the corporate expenses for the year, somewhere between $115 million and $120 million, consistent with our original guidance at the beginning of the year. And in that number, there's about $14 million of non-cash stock comp. Our operating cash flow, as defined in our senior credit agreement, we are expecting approximately $800 million, and that's consistent with what we said over the last couple of quarters. Full year uses of cash, full year cash interest expense, about $435 million. I'll remind everybody again that we have 5% SOFR interest rate caps on most of our floating rate debt, and currently, about 95% of our debt, including debt which is on the rate caps, is at fixed rates. Cash taxes of about $50 million this year. That does not include a pending refund of $21 million that we have had pending from the IRS for a while now, and we're hopeful that we will be coming in sooner than later. Routine CapEx of $110 million. Of course, our preferred dividends are $52 million, and we have $15 million of required amortization on our Term Loan D. So, our free cash, as we define it, we still expect approximately $150 million before any acquisitions, investments, and our common dividends. We're very well positioned three quarters through 2023. We think we have a very good fourth quarter shaping up, and we're looking forward to a strong political in 2024. I'll turn the call back to Hilton. Thank you, Jim. Operator, at this time, we'd like to open up the call for any questions that anyone may have. 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 on your telephone keypad. And I'll just give it a few moments for the queue to build. It looks like our first question is going to come from Aaron Watts with Deutsche Bank. Your line is open. Hey, everyone. Thanks for having me on. I just had two questions. I guess, first one, most of the local broadcasters have painted a picture of relatively stable core ad, core advertising revenues, perhaps even some green shoots of turning a corner to improvement rolling into 2024. That's a bit of a contrast from commentary some of the more large market, national-focused media companies have talked to. Do you see the bifurcation between national and local continuing? Any warning signs that local confidence is wavering? And anything you're seeing or hearing that makes you feel better on the core ad outlook rolling into 2024? Yeah. Thanks, Aaron. It's Pat. Local is strong, and it's been strong. The national ad market has struggled pretty much the entire year, but we see no weakness locally, and that's something Sandy covered that. You know, with the automotive category coming back with a vengeance, I mean, that's been huge, not just in local but also national spot, which is different than national advertising. So you know, we think we'll have a good fourth quarter and, and, you know, feel like we're in very good shape going forward. All right. Thanks, Pat. That's helpful. And then just secondly, maybe this is pointed at Jim. Saw the commentary in the release that you don't anticipate any material capital projects at Assembly in 2024. That said, can you remind us what additional cash capital will be required for Assembly near term? And with regards to the evaluation of opportunities to unlock value of the real estate, could any of those opportunities happen over the near or medium-term horizon to help you accelerate your deleveraging process? So, for the fourth quarter, actually, on a net cash basis, we expect to receive cash. We do have a cash outlay, but we are expecting cash in from the quasi-governmental agency that's paying for the public infrastructure. And as we've said before, those funds are in a trust account at U.S. Bank. It's just a case of very, very slow, but paperwork to get the cash in. So on a net basis, we actually expect to receive money in the fourth quarter, not have to outlay anything, which is the good news. I'll let Hilton take the second half of your question. Well, on this call, I'm not gonna commit to anything publicly that we intend on doing. But Aaron, let me emphasize something. We start getting revenue from what we have built at Assembly Studios in three weeks, and it will turn out to be, if it is not already, the single largest and most important asset that this company owns. The way I look at it, it's as if we had simply purchased a mid-market television station that will deliver about four times the free cash flow that that station would have otherwise provided. But yet, it does it through film and television productions.... So I know that you and our company are viewed based on our cash flow, not necessarily on the inherent value of the assets that we own. But this particular asset has a huge inherent value and will begin, within a short period of time, before I can blink, generating revenue at a larger percentage capacity than any individual TV station that we own in our portfolio. And that's actually saying a lot. And, Aaron, I will tell you, I'm exceptionally proud of that. One of these days, everyone on this call, I would love to host you as an investor day at Assembly Studios. We do not anticipate large capital expenditures. I'm sure during the course of 2024, there may be some that arise, but the demand for the real estate that is not yet developed, that Gray Television owns, debt-free, is stunning. And so we will see what comes from that. And so on this call, I don't want to commit the company or to evince to others what we are willing or not willing to do. But we have an asset that few companies have, and we're very proud of it. I appreciate those thoughts, Hilton. Thank you. You bet, Aaron. Aaron, just as a quick follow-up to, to kind of put a, a little bit better number on the net impact in Q4. The, you'll see in the Q, when it gets filed a little later today, that our outflow in Q4, we expected in the range of $20-$25 million, but we're still, expecting, approximately $85-$90 million inflows, primarily from the quasi-governmental entity, for the public infrastructure. And again, that inflow from that entity, you know, a lot of the public infrastructure is done, but the paperwork involved and the red tape involved to get it out to getting multiple municipal entities to check off the appropriate boxes is, I would just say, from my standpoint, it's frustratingly slow, but the good news is the money's in the bank, and we just gotta keep processing the paperwork. Okay. Thanks, Jim. Thank you, Aaron. Our next question is going to come from Steven Cahall with Wells Fargo. Your line is open. Thank you. So Kevin, I think Retrans revenue is gonna be up around 2% this year based on the Q4 guide. It slowed down quite a bit from the last couple of years. I know there's a lot of timing in there with fewer renewals. It's a lot more complex these days between the mix of streaming and traditional, and you just have higher rates overall. But as we look out into 2024, between some of the constructive view on what's happened with Disney Charter, plus, I think just more subscribers up for renewal, is it reasonable to expect that Retrans revenue should accelerate, next year versus this year? And then, Pat, just wanna go a little deeper into the core ad outlook that you talked about. Things sound pretty positive. I was a little surprised that the guidance isn't a little higher. I think that there's probably a fair amount of crowd-out benefit in Q4 on the core side, and the guidance isn't a lot higher than Q3. So can you just maybe help me understand, is that just a bit of conservatism, and there could be some upside there, or anything else in the core guide? Thank you. Steven, on the first point, yes, we would anticipate retrans would be higher next year, just simply the volume of contracts that are being renegotiated. And we expect those, those will go forward as all of our retrans agreements, really, almost without exception, for 20-some years have gone. Meaning they won't be fun, they won't be easy, but they'll get done quietly in the background with no noise or disruption, and continue to move the needle closer towards full value of our stations. So yes, we do expect retrans to be higher next year. And with that, I'll let Pat address core. Yeah, I think the simplest way to answer is, you know, there was some crowd out last year. It wasn't a ton of crowd out. And, you know, could there be a little bit of upside in Q4? Potentially. So, you know, historically, we've been conservative, and I'm not, you know, telegraphing anything. I just think that, you know, the market is pretty strong, and I think you'll see that reflected in our results. Maybe if I could ask a quick follow-up. I know that, for competitive reasons, you know, giving revenue or EBITDA related to your new anchor tenant and Assembly is, not, not possible. But as we think about the contribution in 2024, could it be a material contributor to either EBITDA or free cash flow next year? Thanks. David, as Hilton commented, the Assembly Studios obviously is primarily a long-term lease annuity to the company, with obviously, with the 5 sound stages we're keeping, there's some shorter term leases as well. Hilton commented that because there's minimal operating expense for the facility, and actually, we only have less than 10 people of our own employee at Assembly... everybody else is either NBCU or a contractor for NBCU. It will be an extremely high margin business for us, and, as Hilton said, it would, you know, be akin to a, you know, a nice performing television station. But in the context of a company that's doing in a, you know, $3.3 billion-ish of revenue, material becomes a fairly large number in my mind. So, is it nicely additive at a high margin? Yes. And is it a long-term annuity? Yes. Again, materiality at a $3.3 billion revenue company is a little bit different. Thank you. Thank you, Steven. Our next question is going to come from Paul Farrell with Marathon Partners. Your line is open. Thank you. Thank you for taking my question. I was looking through the disclosures in the press release, and it, I couldn't tell if the CapEx on Assembly was cumulative or additive, but it looks like the total gross investment there is something close to $500 million. Is that correct? And if so, doesn't that imply that any kind of reasonable return on that actually generates something that is meaningful to the company's net income or free cash flow? So the cumulative amount through the end of this year, netting the repayment of public infrastructure from the governmental entity, and also assuming a very small few acres being sold to a residential developer in order to be able to check the box for residential development on the overall acreage, we probably will have a net investment of probably in the $450 million-$475 million range. I guess I'm just curious what you would consider a reasonable return on that investment. Well, we think it's gonna be a very solid return, and we can't speak to you, Paul, on percentages at this time because we have NDAs on that. And, assuming the strike ends sometime soon, we think it's going to be a very solid and very profitable investment, and you guys will get to see it as each quarter, you know, comes out through the course of 2024 and thereafter. But would you agree that as we sit here today, there's a net investment of on your numbers, $450-$475, which essentially you're getting zero credit for, given that everyone values your company on free cash flow or average two-year EBITDA? Paul, the value of Assembly Atlanta is worth more than the entire market cap of Gray Television. So I've made very, very clear that we are grossly undervalued. And yes, you're accurate, we get no credit for what we have been able to create at Assembly Studios, but I think that will all materialize out as our quarters go forward. So I think our stocks are roaring by. As a reminder, if you would like to ask a question, please press star one. Our next question is going to come from Dan Kurnos from Benchmark. Your line is open. Great, thanks. Good morning. Maybe just to follow up on Steve's question, Pat, on core. You know, you've got Phoenix coming on board. You know, I, I know Scripps gave some numbers around the impact of local sports deals. You obviously messaged there could be something else to come that I assume is not in your if you land another one of those deals. And it sounds like national's getting better with local stable to kind of up. So, you know, I'm just sort of trying to triangulate the impact of, you know, some of the stuff that you've signed, plus kind of what you're seeing and underlying. And I know you guys have outperformed the industry and gotten no credit for it for the last, I don't know, 3, 4 quarters now. So it's- How about 3 years? Probably partly more difficult to come. All right, Hilton. Well, I'm trying, you know, we're trying to keep it, you know, maybe a little more further focused. But yes, I, I know what you're saying. So, Pat, incremental, is there anything else that you can kind of provide around that? Or, you know, I don't wanna kinda ask this question again, but I guess, hopefully, you see where I'm coming from. Sure. So look, I think as it relates to sports deals, you know, we have one. You know, it's basically started in October. I think one thing to consider, when you talk about the sports deals, that they will all likely be different. So the types of deals you do may include a lot of advertising inventory for a station or stations. Other deals may have very limited advertising inventory for a station or stations. So, you know, that's a, that's a sort of a big variable there. But the reality is... ... You know, we are in terms of core revenue, I think Scripps is somewhere between 40%-50% of our core revenue. So moving the meter for us is a different thing than moving the meter for Scripps on core. And look, at the end of the day, I think there's great opportunities in sports. We're gonna be aggressive in pursuing those opportunities, and we think it's at some point, you know, when we acquire, you know, a number of franchises, hopefully, you know, there will be some significant impact to us, but right now there isn't. Yeah, no, that's, that's fair. I, I think that's a fair statement. Kevin, you know, I—since you brought it up, this comes up from time to time, you know, you brought up ratings, you brought up local news. I'm just kind of curious, either on an absolute or relative basis, how local news in your markets performed? Why don't you just read that paragraph again, Kevin? Yeah. Our -- We're very happy with the ratings. As I said, we look at the trend lines on aggregate basis of viewership of streaming cable channels and broadcast, and it's clear broadcast is pretty stable, streaming is growing, and cable is declining. And as you saw in our deck, for us, the strength of our ratings is local news, it's local programming, and as Sandy mentioned, we've been now leveraging our content with a new daily show called InvestigateTV and a digital product that we're now broadcasting in some markets, called Local News Live. So we're actually starting to take this really good content and leverage it and put it on in place of syndicated shows, and are getting better ratings. So we think the audience is there, and they're certainly finding us, so we're definitely comfortable with where our local news ratings are. They've been holding in, and we don't see that changing. Got it. No, that's, that's helpful. And Hilton, since you're maybe in a sharing mood and before Kevin kicks you under the table, how do you feel about political next year? Oh, well, I think it's gonna be huge. I think political is going to be absolutely huge. It is yet too early for us to handicap who the respective nominees of their parties will be. But regardless of that, we still are spending less on political advertising the presidential year than Halloween costumes or Easter eggs. So I think that the future of political spending is huge, and regardless of the fact that there's many avenues to reach people, the single best avenue is local, news-centered TV stations. So I think 2024 is gonna be fantastic. All right. That does it for me. Thanks, guys. Appreciate it. Our next question is going to come from Nick Zangler from Stephens Inc. Your line is on. Hey, guys. High-level question just on this Charter-Disney deal. Just love to hear your perspective on how quickly these MVPDs and, and other network streaming services will look to bundle together. And then specifically for Gray, are you more optimistic on the potential for reduced MVPD churn as you go forward, or is it maybe the, the content curation that occurred specific to that deal that makes more room for spend to be allocated to Gray for the value you provide? Which of those two are you more excited about in the near term? Good questions. Give me a moment to think about that. Been doing retrans, and cable programming previous, before I came to Gray for a couple decades now. I'd say it's, in my experience, the pay TV distributors have been eager to rationalize some spending for a long time, and that would mean more flexibility in what channels are carried, not simply carry every channel that a content creator dreams up, and now put every channel that's dreamed up on a basic cable tier and pay for it. And there has been some rationalization over the last few years of cable channels that have been dropped, have been wound down, et cetera. But it seems that the Charter-Disney deal was a larger move onto rationalizing the number of cable channels than we've seen in any single deal. So that's probably more, I guess I'd say, if I had to choose, probably a bit more impactful to the ecosystem. In terms of timing, it would just be my estimate that no distributor and content company is going to rush to do a deal terribly early. So you'll as deals come up for renewal over the next couple of years, probably there'll be some new structures that will develop, but that's not going to happen sort of on its own. It's going to happen as individual contracts between big distributors and big content companies come up over the next few years. Got it. That's very helpful. And then just one follow-up here. Assuming you're able to gain incremental access to sports content, and it sounds like you guys might have a few things brewing here, I'm wondering if your existing distribution deals are flexible, such that as you add more content, you can immediately then command improved distribution fees, or whether you have to wait until the next renewal to be ... rewarded for the improved content that you might be bringing to viewers? Thanks. Sure. So at a fairly high level, our contracts say that if we add content of a certain type, it would trigger a fee. So historically, if we were to add a Big Four affiliate, whether we buy the station in a new market or we add an affiliate in a market that didn't have a local affiliate, right? There used to be lots of markets without a full range of four network affiliates. As we add one of those, it would trigger an additional carriage obligation and additional payment obligation. The sports, professional sports is similar to that, in that, as a general rule, if we add sports to a station, we've negotiated with providers that if we deliver certain kinds of sports and certain kinds of games and certain channels, that it would trigger an additional or a higher distribution fee. Generally, that's typically the language in the last several contracts. There are some that don't have that language, but those contracts are all coming up for expiration in the next 12 months. And given all broadcasters are seeking local professional sports, I would expect that all broadcasters and all distributors are having the same kinds of conversations about what triggers to include in their contracts, should local sports come to the local broadcast station. Great. Very helpful, guys. Helpful, guys. Thank you very much, and good luck going forward. Thank you. Thank you. Our next question is going to come from Alan Gould from Loop Capital. Your line is open. Thanks for taking the question. I've got two here. First, what are the financing options for Assembly? I mean, going on Hilton's analogy to a local TV station, I don't think you'd have an unleveraged TV stations in your portfolio. And then I'll follow up with a question for Pat and Kevin on CTV. All right, well, let me answer that. Gray paid for Assembly Studios the old-fashioned way. We paid cash. There is utterly no debt on that real estate development. It's owned outright by the company. The initial investment came from funds we didn't anticipate receiving during the dual Georgia Senate runoff a couple of years ago. And then we have paid, based upon Jim's prudent guidance, what we needed to do to build it out of our free cash flow every month. And those cash expenditures have essentially come to a close. And as I mentioned earlier, we start getting free cash flow from that investment in about three weeks, certainly by the time we next gather on our call. Those cash flow numbers, while we cannot provide them to you directly, will go up substantially when this strike comes to an end. I have utterly no inside information. We're not part of either party. But what I read in the press is that the strike is more optimistic that it will conclude than it will continue through the end of the year. And then when that happens, we're going to have thousands of men and women out there making movies, making their job, and creating value for the shareholders of our company. I mean, Hilton, I understand your bullishness on the studio, but wouldn't it make sense to have some, a non-recourse financing, especially based on the cash flows that are about to start coming in? Alan, as we said, I think, on a couple of calls ago, now that the studio phase is completed, we said very clearly, like I said a couple of calls ago, that we will be taking a pause and thinking very hard about what the possibilities are over the next three, five, seven years to continue to unlock value there. I remind everybody that there's still approximately 50 acres or so that is undeveloped. Closer to 80. Okay, Hilton corrected me. He said it's closer to 80, so that's my bad. So that is, you know, financing options for Assembly, you know, that's part of that evaluation, that's part of that thought process. And I would remind everybody that Assembly Studios is in an unrestricted subsidiary, so it is currently outside of all of our credit agreements. So it gives us a lot of flexibility on a go-forward basis to consider a wide range of possibilities. Alan, this is Hilton. Let me follow up on your comment. Yes, I am a bull, and I suggest to everyone on this call that all of you should be a bull on what we are doing as well. It is a unique asset for our company and for our state, and the film and television production business is the fastest growing part of one of the fastest growing states in this country. I think you should all be very bullish on what we're doing. Okay, and then to follow up on the CTV side, I know a lot of the news put their- ... stations, the local news on FAST stations, that makes sense with the growth of CTV. But Pat or Kevin, what impact does that have on your retrans when you start putting some of your local news on these FAST stations or CTV stations? There hasn't been any effect. It, you know, as we sit here today, the CTV, the connected TV business for us is still small. We would expect some growth. We mentioned today that there's gonna be a number of more rollouts. Candidly, 18 months ago, we thought we'd have most of our stations rolled out. Due to technical challenges on the part of our partners, you know, we haven't gotten as many rolled out as we'd like, but, you know, we think over the next year or two, there will be meaningful revenue coming from that area. Okay, thank you. Our next question is going to come from Craig Huber with Huber Research. Your line is open. Thank you. Your retrans subs, I believe you guys said three months ago, that they were down low single digits year-over-year net. Just, can you give us an update on that number, please, this time? Hi, Craig. What we are saying is that our sub loss are generally consistent with what we're seeing in the industry and broadcast peers. We're not doing a quarter-by-quarter calculation any longer. We've gotten too many long philosophical discussions over days over how we define the word subscriber versus others. So just take it at a high level. We're not materially better or materially worse in terms of sub numbers than our peers. Half of our footprint, large markets, half are footprint—45% of our footprint is in mid-sized markets, so about 5% is in small markets. So we are, there was a while there where our sub numbers were much better than our peers because we were predominantly midsize and small markets. Given our current footprint, we're very much now, like everybody else, a large market, mid-sized market company, split almost evenly between the two. So we're finding our sub trends are consistent generally with everybody else's. So there's not really anything to call out that we're better or worse than what the peer group is seeing. Okay. My second question, please. Your core advertising trends have certainly held up better than your peers out there. Just like to hear your thoughts on why you think your core advertising has been doing so much better than your peers in this market in particular. Yeah, it's well, it's the strength of our stations. You know, and you if you've been on calls before, you've probably heard me talk about our training program and our vertical program. Those things which are unique in the industry have an impact on our local ad sales, you know, every quarter. We also have this, you know, maniacal focus on new business development. So I think those three things, combined with the strength of our people and our stations, are the reason we tend to lead the industry in core advertising. Yeah, absolutely. We're really fortunate to have strong general managers and strong sales managers that new local direct revenue focus and continuing to improve quality, and we see the results of that in core. I appreciate that. What% of your Big Four TV stations are ranked, say, number one or number two in ratings right now? I think 90%. Isn't that the big reason why you guys are shining versus your peers? Absolutely. I think that's basically what you're saying, right? Right. Absolutely. Yeah. And then out of that 90%, how many are ranked number one in ratings? Hold on, I guess it's in our, We'll tell you exactly. Hang on one second. Bear with me. It's just our upgrade section. We have 113 markets. I would say we have 80 markets with the number one ranked station and 102 markets with a first or second ranked TV station. We're pretty proud of that number. I mean, the stations have obviously continued to focus on quality local content, and we see that our audiences respond very positively to that. Great. That's all I had. Thank you. Thank you. Our next question is going to come from Jim Goss with Barrington Research. Your line is open. Thanks. To the extent you're talking about the large, medium, and small markets, are you seeing any appreciable difference in ad trends among them by market size? Or might it be more geographic, to the extent there is differences? Jim, not really. You know, there really isn't any, you know, any group, whether it's small, medium or large, that outperforms the others. So, you know, geographically, same situation. We really can't point to, you know, a single area, whether it's the Midwest or the Southeast or whatever, where certain stations are performing better than others, you know, in different geographic regions. So I would no. And let me follow up with what Pat said. We're seeing no sign by region or by market of any kind of recession. We just aren't seeing it. And when we began 2023, everyone that was on our calls at the time thought, "Oh, well, we're going to have a recession. Rates going up are gonna devastate things and every..." We're not seeing that anywhere. The changes that we have in terms of our core revenue are things like automobile. All right? Automobile industry, we got. They didn't advertise a lot because they didn't have enough cars to sell for the demand, and now all of a sudden, they've got to do that. It's returning, but there's no signs of a recession that we yet see anywhere in the country. Okay, very good to know. A couple of other questions about the sports focus. And you made a point of saying how important it was to take advantage of the opportunities. I'm curious about a couple of things. One, the situation you have in Phoenix with the Suns and the Mercury, are there other markets that you think you can do similar things? And are these sort of non-exclusive add-ons to other program rights that are existing in those markets? And then separately, with regard to the ACC programming, is that totally within the context of the CW? To the extent that the CW has changed its stripes quite a bit with Nexstar recently in terms of the orientation, are there additional stations in some of the markets where you might be more inclined to consider affiliating with the CW, whereas you may not have earlier? I'm going to let Pat go for this, but I do want to say a couple things, Jim. First of all, everyone on this call may or may not have actually looked at our footprint. This is something that we actually need to make sure that you guys understand. One of the great things about what we have built over the last couple of decades is that we cover small markets, mid-sized markets, and large markets. And so we're one of the very, very, very few broadcasters that can deliver a broadcast feed for a sports team for every single viewer that wants to watch those teams. One of the things that we preach is that, you know what? You need to be on free TV. Gray can deliver that. We did a brilliant job and are doing, I should say, a brilliant job with Suns because we're in Yuma, Tucson, Phoenix, Flagstaff, everywhere in the state of Arizona, and we got letters. And this is something that the investing world needs to understand. Our GM and our station got letters from individuals who live on the American reservations, the Native American reservations, saying, "Thank you so much, because all of a sudden, for the first time, we can watch our basketball team on our reservation in our homes." And that is the power of broadcast television. That is also, I want to say, one of the unique abilities that Gray has. If you look at our home state of Georgia, we're in every single television market. That's true for South Carolina, Alabama. That's true for almost all of Mississippi and Louisiana, all of Kentucky, all of Tennessee, Wisconsin, Arizona, Nevada. You go through the list, and we cover the smallest cities to the largest metroplex, and that gives us an ability not only to put it on the air, but because we have such a high concentration of deeply embedded TV stations, we can promote these sports teams better than any of our competitors. That is our sales pitch, and it's what we've been building for almost 30 years. Yeah, just to follow on Hilton, I think the way to look at it is, we're not just focused on, you know, the Phoenix team or the Atlanta team or the Cleveland team or the Nashville team. We have markets. I'll use an example here in the state of Wisconsin. We're not in Milwaukee, but we're in every other market in Wisconsin. So we are a great partner for whomever ends up with, you know, I'll make this up, the Bucks or the Brewers. And that situation is true for a number of different teams. So we, you know, again, we have one team right now. We're not, you know, want to get way ahead of ourselves here, but the reality is our geography is really favorable to, you know, many sports franchises. And Jim, you asked a question about CW and the ACC. The ACC rights that were formerly with Diamond are now at the CW, so the ACC football and basketball rights. I think that's what you'd asked. I just wanted to confirm that. That is correct. Yeah. And we're very, we're very happy with that. And, I will tell you personally, I love watching the CW and ACC, you know, football. I watched the Georgia Tech game here recently in Atlanta on our CW here. We're proud to be affiliated with the CW network, as we are with all of our networks. But I do want to just take a moment and salute, you know, Perry Sook and everyone at Nexstar for what they've done for the CW. They're doing a great job, and we're proud to be in business with them on a local basis. Yeah, I should have mentioned that we actually do the production for CW football and for CW basketball. That's, that's Raycom Sports, one of our production companies. Okay. But the other part of the question was whether there are additional CW affiliations that might be under potential consideration, would you say, with your- I think that's a question for Perry Sook and the CW, not for Gray Television. Okay. But just so you'll know, I'll take any CW affiliation that they want to give us. So yeah, we're open, but that's a question for the people that own that network. Okay, thank you. Our last question is going to come from Michael Kupinski with Noble Capital. Your line is open. Thank you for taking the question. Congratulations on working with Jonathan Katz, by the way. The guy's been a pioneer in the network business, and I think that's a real plus. I was curious on fleshing out your strategy for the, for those networks, and also, you know, how many networks do you think you might need to gain scale there? And then also, do you plan to grow affiliates in maybe the Gray affiliations and stations that you might have, maybe just to kind of flesh out your strategy there? Yeah, it's really Jonathan's strategy, but, you know, from our perspective, being able to partner with the very best in the business is a huge advantage. You know, back in 2011, and this is back in the Raycom days, you know, Raycom partnered with Jonathan to launch Bounce and Grit and Escape and Laff. And those networks grew tremendously, and he ended up selling them to Scripps, much to Raycom's dismay at the time. And so, you know, one network is an African American-focused network. One is a sort of Western/action-adventure. Having access to the libraries from Lionsgate and WBD is another enormous asset for that business. So look, I think in terms of other station groups, I could... You know, I don't want to speak for Jonathan, but I'm sure he's talking to a lot of folks, you know, who run traditional television station groups beyond Gray. But I don't, you know, in terms of his, you know, sort of strategic approach to that area, that's really his deal more than mine. Gotcha. Thanks for that. I appreciate it. That's all I have. I wanna thank you for your excitement about what he is doing and our participation in that. I agree with you. I think he's a star, and we'll see what the future brings. Operator, is that the last of our questions? Yes, so I'll turn it back over for any closing remarks. Thank you very much. I'd like... Normally, I just sign off, but let me just sort of end this morning's call with a few things. Gray Television's assets, our core, our retrans, our ratings, are all best-in-class. And as all of you know, Kevin is a human being who speaks softly but carries a big stick. And so I am going to reprise his big stick as we close this. Our data illustrates that Gray's local newscast delivers more household viewership in each of our markets than the total of all network prime viewership on NBC, CBS, and Fox combined. Gray's local newscasts deliver more viewership than the total of all NFL games on ABC's Monday Night Football, CBS, Fox, and NBC combined. Gray's local newscasts deliver more viewership than the total of all three major cable news networks combined. Finally, Gray's local newscasts, by a factor of over six times, deliver more household viewership than the total of all 15 top cable sports networks in their markets. The reason we outperform is 'cause our stations outperform. This is a unique company, and I think we should be valued as a unique company. So thank you for being here and joining us for this conference, and I look forward to reviewing our year-end results next year. Thank you, operator. Ladies and gentlemen, this concludes your call. You may now disconnect.