Okay, and for our next fireside chat, I'm Steven Cahall, a media analyst at Wells Fargo, and joined by Jason Combs from the E.W. Scripps Company. Jason, t hanks for having me, Steve. Yeah, Jason, so often when we're talking about M&A in the industry, it's sort of vague, general, and that's not what we're going to be talking about here in a moment. Were there some headlines you wanted to talk about? There are some specific items, and I thought that you all might have a great opportunity to address it as well. Just for those folks who were listening yesterday, Sinclair reported an 8% stake in E.W. Scripps and also said in their filing that they're looking at a merger. It's what I would call a bear hug. Jason, I think you all also had a release out yesterday both saying that you look at all transactions that create shareholder value and also would do what you needed to to protect the company. With this as this week's backdrop, and I should mention the stock had a pretty big move after all this as well. The floor is yours. Yeah, so you used the term bear hug. I don't know if I would necessarily call this a bear hug. I would call it kind of an unusual way to try to drive re-engagement on a process. From our perspective, we were engaged in talks with Sinclair about a potential combination of the companies, ultimately trying to reach an agreement that we felt was in the best interest of our shareholders. We didn't get to that agreement during our discussions, and ultimately Sinclair shut off the discussions. From our perspective, our board reviews and analyzes every single deal that comes across the table, and they do so through that lens I just talked about of ultimately trying to find the opportunity that drives the most shareholder value. From my perspective, I guess I would say I kind of feel like the events of the last couple of days are a little bit of unnecessary theatrics. If there's interest in re-engaging conversations, simply pick up the phone. Both companies are controlled companies. When I kind of look at this situation, I think what was in their filing was it was proposed as an equity merger. I and my team have done analysis on this. Also looking at it as equity mergers, these are levered companies, makes a ton of sense, and we know there's a ton of synergies in broadcast combinations. That probably means that if there was disagreement, it was either around ownership or some of the social and control issues for two controlled companies. Maybe you can talk to whether it's specifically or generally in these situations, like what are the obstacles and why conversations would get shut off and then require some re-engagement? Yeah, I think there's a lot of complexity to any transaction, especially transactions that involve family-controlled public companies with highly levered balance sheets. I think they'd add some complexity around a variety of issues, whether it's economic splits, whether it is impacts to the capital structure and potential there, whether it's governance issues. There's a whole range of issues. I highlight that there is a high level of complexity to any transaction in this space. I also will point back to another thing that's true, and it's what you said to start the question. There is a tremendous amount of financial benefit to be had for large-scale local broadcast consolidation. It is really about leaning into the opportunities to find and navigate through to an opportunity that both allows you to get past those obstacles that I just talked about in order to be able to realize the full benefit of consolidation. On that benefit, I think about $300 million in synergies was proposed. I think that's roughly a 30% uplift to our kind of forward EBITDA of the two companies on a combined basis. I mean, that's kind of two to three times what Nexstar and TEGNA have proposed in their merger. One could be optimistic, one could be pessimistic, well, conservative, I should say, not pessimistic, or it could simply be that this combination has more potential, whether that's retrans rates or duopolies. I was wondering if you could comment on the synergies as you view their efficacy. Yeah, so any combination is going to have a significant amount of synergies through a variety of buckets, whether it's retrans, whether it's corporate overhead, big four duopoly markets, potentially revenue synergies. A lot of different things. I don't think you can necessarily compare one deal to the next because from one company to the next, the variables can be a little different. You mentioned retrans, for example. That retrans synergy may be different on one company than the other. I think from a whole dollar perspective, the synergy number that Sinclair included in their 13D was roughly in line with what Nexstar and TEGNA does. I think you have some data points that all point back to significant value creation for shareholders through synergies in any one of these transactions. Yeah. And then finally on this topic, maybe this deal is consummated, maybe not, but just generally, what do you think about as the merger opportunities, the best merger opportunities for Scripps over the next couple of years? Yeah, so I mean, I think the question we get a lot is, what about you and Sinclair, you and Gray, all those different combinations, right? There are three family-controlled public companies that are out there. We also get asked a lot about Cox Apollo. Each company has in their own way leaned into the fact that this is a deregulatory environment that has the potential to drive significant value for our companies and to allow us to ultimately become stronger and more economically durable enterprises as we move forward. We're all leaning in. We've all talked about that very publicly, and you hear Adam talk about that on pretty much every earnings call. It's a matter of finding the right combination, as I said before, and in leaning into those synergy opportunities. Our board is committed. We are enthusiastic about the opportunity that sits ahead for transformational M&A, also for some of the smaller stuff like we've announced three deals so far in kind of our buy-sell swap strategy. I do not want it to be lost to anybody. This is something that we are absolutely leaning into. We know that the deregulatory environment may not last forever. While we can better position the company, we will look for every opportunity. Is transformational M&A for Scripps a when, not if, or kind of TBD? I think there's, as I said earlier, a lot of factors that play into that. I think that it is something that we are committed to if we have the right deal and the one that the board ultimately feels is the right deal for shareholders, then we would lean into that opportunity. Just lastly on this, as of the 10Q, I want to say the preferred equity value was, started with a 7, 730 something, maybe in that kind of hundreds of millions of range. How does that factor into conversations? Is it thought of as something that may have the opportunity to become a piece of common in ownership? Is it something that's generally thought of as a part of your leverage structure? How do your potential partners, acquirers, however we want to talk about them, think about that within the cap structure? Yeah, so we get asked a lot about the prep and how it could play in there. What I would say is we have a really good relationship with Berkshire. We were really excited when they were able to help us close on the ION acquisition by taking a big part with the prep. Ultimately, through that partnership and collaboration the last couple of years, if we had a deal where we thought they could partake that we thought benefited them, benefited us, we would feel very comfortable taking it to them to see how they react. I can't speak on Berkshire's behalf, but I can say from a Scripps management perspective, we feel really comfortable engaging with them on deals that, again, drive value for both them and for us. Yeah. Okay, on to the operations of the business. Maybe we can talk a little bit maybe first about advertising. I think it's been a choppy year for ads due to the tariff uncertainty, but your guide for Q4 is particularly strong. I know the Tampa Bay Lightning is in there, which is a little bit inorganic, but I mean, dollars are dollars. Maybe first just how do you think about the overall strength of the market, but then can drill that down to a little more specific to what's in your business, both in Q4 and on a go-forward basis on the local side? Yeah, so you kind of alluded to strong Q3 and Q4 performance. Our Q3 print was plus 2. Our Q4 guide was plus 10. Both were best in class in the industry. Really excited about that performance. I think you can point that back to a couple of different things. Certainly strong sales execution, certainly our sports strategy. You mentioned the Tampa Bay Lightning, but I think there are some other components beyond Tampa Bay that continue to help us drive incremental value in the local business. I think you can also point back to some political crowd-out benefit because for those who may haven't kept tabs on us, we really had the best political footprint in the industry last year. That does benefit us some this year in terms of that bounce back. You asked kind of on a go-forward basis. I think some of the momentum, both from a sales execution and a sports perspective, carries forward into the first half of next year. Certainly I can see some growth in that first half. I do think you'll start to see some headwind in the back half of the year as you get the political crowd out next year. Whether that causes us to be up a little for the year, down a little for the year, too early to say, and we're not giving guidance yet. I think we would view the core ad space as pretty stable right now. I think that we're kind of clicking on all cylinders from a sales execution and a sports execution perspective. On top of that, looking forward to above and beyond that political next year. Good segue into political. The cycle forecasts I have seen, I think from AdImpact, are lower than the presidential year, not unsurprising, but probably a record midterm. Maybe comping it against 2022. I know there is always different idiosyncratic and race maps, etc. How are you thinking about it for Scripps? Yep, yep. So we've seen some of the same AdImpact stuff, and certainly we've spent some time looking across our footprint. I think we have a pretty good footprint going into 2026. We have seven competitive governor races. We have a competitive Senate race. And there is some noise right now in the House tied to some of the redistricting efforts and the impacts of that. But I think we have the potential for a large number of competitive House races as well. So kind of as you look at our footprint, I think from a total dollar perspective, as you alluded to, the ecosystem is going to have more dollars in it. And I believe that the largest share of those dollars will continue to go to local broadcast. So based on all that, I think we're pretty optimistic going into the year. That's going to drive a significant amount of Cash Flow. I mentioned at the beginning when we were talking about M&A, leverage has been a focal area for us. It will certainly help us from a Cash Flow perspective next year to pay down debt and kind of continue our progress on delevering. The races that you talked about, seven governors, Senate, see what happens in the House, how does that compare to 2022 just in terms of competitive spot? It's going to be fairly similar. Yeah. Okay. Yeah. On retrans, you have another big retrans renewal year in 2026. Kind of thinking back, 2020 was a huge year with, I think, one idiosyncratic renewal that had a really big move. 2023, three years later, was big, not as big as 2020, but big nonetheless. I think you are kind of closer to fairness as you get into 2026, but still with a lot of subs renewing. How would you kind of frame the potential for distribution revenue at local next year? Yeah, so you're correct on kind of that cadence. We were playing some catch-up tied to some legacy situations tied to some of the cable systems or cable networks we used to own. I do think we've closed a lot of that gap. We are really optimistic going into next year. We have 70% of our subbase renewing next year, mostly kind of spread through the first half of the year. We continue to believe there is runway and headroom for additional price push and price increase there. I think when I'm talking about retrans and distribution, the bigger story kind of gets down to the net. I think that while we will continue to see positive movement on pricing on gross retrans, really focused right now on the affiliate fee side. We have three of our nine MBCs renewing at the end of this year. We also have ABC, which is our largest affiliate group, 18 stations that are renewing in the middle of next year. What you've heard from us and you've heard from our peers is we're kind of at an inflection point where our expectation is affiliate expense as we move forward goes down, not up. Years ago, it used to go up every renewal cycle. The last renewal cycle, we kind of pivoted it to kind of flat to up low single digits. Now we believe it's going to go down as we move forward. When you kind of net that runway we still have on rate and that trajectory on reverse, I would expect net to kind of grow modestly as we move forward. Just to get a little deeper into some of the reverse trends, I mean, I've heard this with a lot of your peers as well, and maybe without calling out any specific of your network partners. Number one, are you seeing a bigger trend towards less fixed, more variable? Or where there is fixed expense, are you seeing networks more willing to discuss step-downs? I mean, we're talking about the expense goes down, right? It's kind of the piece here. You either get there on it being variable or the fixed amount stepping down. You can just talk to those dynamics a little bit? Yeah. I mean, I think our desire would be to have every contract variable. It just makes sense. It aligns with the revenue and the variability of revenue and cord cutting. We also know sometimes it is hard to break practices that have been long established. From our perspective, whether it is shifting to a variable rate, maintaining a variable rate if you are already there, or having your fixed fee go down in the next renewal cycle, they all get to the same point. I think I am pretty confident we will get there on all of them. I think you used the term inflection point. I mean, when you're sitting down with the networks, is just the tone of those conversations completely different? I mean, I think back to my very early media days when CBS kind of thought that they should keep 90% of gross retrans or something like that. And here we are in a very different world where everything's on streaming now with Fox One and ESPN, so. No negotiation is ever easy. They are all knocked down, drag out. I think there is a lot of evidence for us to point to in terms of the point you raised there, how they've taken their product and they've disseminated it now a lot of different places. We no longer have that exclusivity. I think there are a lot of reasons that support our argument for the expense needing to move down. Maybe just lastly for local, so the NBA is returning to broadcast. I would say as an analyst of ESPN, you're seeing more and more content go to ABC over time in addition to ESPN. I mean, combined with what's going on in retrans, do you feel like that this business is stable or growing for the foreseeable future? I do. I mean, I think that between some of what you talk about in terms of the additional sports content, the fact that we continue, I mean, when you talk about our local business, a large chunk of our local business core ad comes through our local news, which remains fairly stable as you look out there. There are a lot of reasons around political, all these other levers to say, yeah, I do think this is a fairly stable business as we move forward and one with some opportunities. We talked a little bit about our sports strategy. That is a growth opportunity for us as we have added local rights. We have kind of filled the vacuum as the RSN model has imploded. We will continue to lean into those growth opportunities to help offset any kind of secular headwinds we see. Over at networks, I do think this business has been a little more challenged. I think it's fair to say that. I know that the Q4 guide, which was a little softer than we expected, had a number of idiosyncratic features in there as well. Maybe first just talk about underlying trend there and what the options are to get or opportunities are to get networks back to growth. Yeah. The Q4 trend or the Q4 guide, I should say, was down low double digits. That was really tied to a couple of things. One is a comp issue. We had more than $10 million in political revenue that ran in national networks the prior year. That will not occur again this year. That is sort of a timing and a comp issue. Beyond that, we have seen, while we continue to see growth in connected TV and our sports strategy, we have seen the general entertainment piece of the business on linear that has been challenged. Some of that came through the upfront where we saw that high demand for sports, high demand for connected TV. When you look at the current state of the broader economy, interest rates still being higher, tariffs impacting a lot of businesses, that has impacted consumer demand. That's impacting national advertising spend and ultimately driving down demand and driving down pricing. Some of the linear cable operators, I've kind of talked about that we thought that this was a cyclical downturn in TV ads. It may be a structural downturn, especially as budgets shift to more digital platforms. I mean, do you think that ION faces a structural downturn, or do you think that this will kind of inflect back? If you think about trying to get ION in the whole networks business, moving in the other direction from a revenue trajectory, I think you need a couple of things. One, I talked about those growth strategies. We saw tremendous growth in revenue year over year tied to our sports assets, and we've added more sports assets. Our connected TV business is something that four years ago really hardly even existed. This year, it's going to be north of $120 million growing at a 35% plus clip. We need to continue leaning those opportunities, and we need more stability in the broader economy to allow an improvement in the rest of the business, direct response and general market. There is absolutely some secular shift happening here, which is why we are so focused on the connected TV growth and capturing the eyeballs as they transition over there and then leaning into sports. On sports, can you just remind us where you're at in terms of the portfolio, how much it's grown over the last few years, and what you think the additional opportunity is for rights? Yeah. We were an early entrant into sort of the rise in women's sports the last couple of years, securing rights three years ago through the WNBA, creating a franchise night, which the WNBA had never had a franchise night before. It was really hard to find it. It was this week it's on a Tuesday, next week it's on a Friday. Now, every Friday night for 15 weeks, you can watch it on ION. The year after that, we secured the NWSL. Those are sort of, I would say, our significant league-wide deals and full-season deals we have that run from kind of spring to the fall. I'll also mention the WNBA. We got in before the whole Caitlin Clark phenomenon, and I think there was some question as to whether we would actually be able to renew that deal. We recently announced that we've signed a long-term extension with them. I think that is, I can point that directly back to the partnership that we have really enjoyed with the league and the value they see in that franchise night. Really excited to continue that partnership. We have kind of these anchor sports rights. What we've done now is we've focused on trying to bring in mostly event-driven sports, still female-focused around them. We've added Athletes, which is track and field events. We had the first one of those a couple of months ago or a couple of weeks ago. We recently added the Major League Volleyball Championship, which will be, I believe, next spring. I'm drawing a blank on the other one. We have one other one we had. Oh, this actually, it's next week. We have the Fort Myers Tip-off Women's College Basketball early season tournament. Yeah, continue to see growth there. I think there are additional opportunities. It is all about finding, I think, the opportunities that really fit into what I think our niche is, which is giving women's sports who maybe have not been given the platform they deserve the platform and the reach that ION brings. Because ION is a reach vehicle, right? It is available over the air. It is available on connected TV, and it is available on pay TV. Does Caitlin Clark have a certain amount of leverage over the revenue of ION year to year? She certainly impacts the ratings. I will say this year that ratings, despite the fact that she missed most of the year with injuries, ratings were still really strong. We are looking forward to when she comes back as well as a lot of these other exciting college players who are going to be transitioning in the league over the next couple of years. I'm from Indiana, so I'm looking forward to it as well. There you go. Just on the margin side, I think this year you'll come in at about six points of margin expansion at networks despite some of the top-line pressure. I think that's at the high end. Originally, you talked about four to six. Maybe give us some insight as to the journey. With the understanding of what you just talked about on the top line, where do you think you can manage margin to from here? Yeah. I mean, that was a stated goal that we put out last Q4, 400-600 basis point improvement. To your point, we're trending towards the top end of that right now. Came through, frankly, some really tough expense decisions, but ones we felt were necessary. We continue to believe that this business, the networks business, is a 30+% margin business. I think that we've made a lot of progress in expense. I think there are other things we can still do on expense to continue to optimize that and other things we can do in terms of programming mix. Lots of different levers we can pull there. I think we talked a little bit about some of the things I think can help move the revenue earlier into a different trajectory. Do you think about networks, maybe if there is a little bit of uncertainty just on the top-line side, that at the bottom line, this is a business you can manage to stable, if not grow? That's our goal, yes. Just on cost more broadly, you've come through some of the last couple of years. You've had some investment projects. I think of CTV. Tableau might have been another. More recently, I think just due to industry trends, you've focused more on cost. Whether it's at the corporate level or kind of company-wide, where do you think you are in the cost reduction journey? I think we've done a good job managing expenses. I think that as you look even at our most recent results, for example, our local media expenses in Q3, I believe they were down kind of mid-single digits year - over- year. We continue to make progress. I think there's a lot more work for us to do and more opportunity. On the last earnings call, Adam, our CEO, kind of leaned in in his commentary to the fact that we intend to really lean into AI and technology in a way that benefits our bottom line. We have an entire transformation team who is focused on spearheading significant initiatives that drive larger ROIs and directly drive dollars to the bottom line. We are going to continue leaning into that. I think you'll probably hear more from us about that early next year. Can you give any examples as to what that could look like? Could be around production in the newsroom and streamlining production, which allows you to do it more efficiently. Something we have done fairly recently is we have actually leaned into using AI to replace voice actors. There are a lot of voice actors, and it is a significant expense you end up spending. You can do a lot of that with AI now. Kind of beyond that, when you think of back office functions, repetitive-type functions, machine learning, AI, technology, all can really drive a benefit there. Does it go into the news gathering function, or is that still kind of a very special place? I think that absolutely is a sacred place. Somebody in our company has actually used this term before. AI is the paintbrush, not the artist. It is a useful tool, but absolutely, we have very strict standards around how we use AI within the news gathering operations. On the balance sheet, so you've done quite a few asset sales year to date. What are the additional opportunities there, given your focus to deleverage? Yeah. First, I'll just remind people about those deals. We announced a $40 million sale of our Fort Myers station and an $83 million sale of our Indianapolis station. So $123 million gross. It's a little under $100 million after tax. Those were at really premium multiples. We were at nine times for Fort Myers, eight and a half times for Indianapolis, which is actually a little north of nine when you back out the great run by the Pacers in the NBA Finals. We were happy to get those deals done at those premium multiples. When we did Fort Myers, we got asked the question of, is this like a unicorn? I mean, you got somebody to pay a really premium multiple here. You found a motivated buyer. We said, no, we think there are absolutely other opportunities. Are they in every market? No. I do not believe that those two deals will be our last deals. Is that in part because sellers are looking to get a little bigger? For those relatively small companies, if they want to get bigger, they have to buy at higher valuations? What are those dynamics? Yeah. I mean, I think it's a supply and demand thing. If you have a motivated buyer who wants to get bigger in a market, whether that is because that is their home market, whether that is because the next round of consolidation is happening around them and they want to better protect themselves, there are a lot of reasons why somebody will want to get bigger in a market. We spend a lot of time looking across our markets and identifying through a variety of different lenses which markets we view as most strategic and which ones we view as less strategic. The focus has really been on identifying those types of buyers in the markets that we deem less strategic. Any update on Bounce to speak of? Yeah. From our perspective, Bounce, that deal or that process has been closed. Bounce was something we looked at last year where we thought opportunistically, it's a great asset for us, generates a significant amount of Cash Flow, very high margin for us. We thought we could, as we were looking and continuing our quest to pay down debt and to delever, that for the right price, we'd be willing to unlock that asset. We ultimately weren't able to get the price that we felt it was worth. We're going to continue to operate it and continue to invest in it and continue to grow it, no different than we've been in the last several years. I would say the focus really right now is on the local M&A side. I'll also mention we did a little bit of real estate as well. We sold about $63 million in real estate. With all of this, the about $100 million net that you'll get, the real estate that's come through to the balance sheet, also next year, I guess on an eight-quarter basis, you'll be trading some midterm quarters, first and presidential quarters, which is probably a little bit leveraging and generating Free cash flow. Do you think you can bring leverage down? I think it's in kind of the mid-fours right now. Do you think you can take that down through the end of next year? Yeah. I think that that's our target. We're in the mid-fours right now. We want to continue taking action. The transactions I talked about with Indianapolis and Fort Myers are both delevering transactions. That is certainly our goal. We want to maximize the political footprint next year. We want to lean into those growth engines I talked about earlier, lean into those distribution renewals that we have to try to drive the best outcome. I do think we'll generate significant cash flow next year. That cash flow largely will be directed towards term loan paydown, our '28 and our '29 term loans. Further down the road, not next year, we may look at some bond buybacks at a discount. Right now, the focus is really there, especially on our 2028 term loan. We did a significant amount of refinancing this year. We refinanced about half of our debt, $1.5 billion. We pushed our maturities out to the nearest term maturity being in 2028. I believe through normal course of business Cash Flow, we'll be able to pay off that '28, meaning that our next maturity that we need to take out to the market and refinance won't be until 2029. Great. Thank you, Jason. You are very welcome.