E.W. Scripps Company (The)

Good day and thank you for standing by. Welcome to the first quarter 2025 EW Scripps Company earnings conference call. At this time all participants are in a listen-only mode. After the speaker's presentation there will be a question and answer session. To ask a question during the session you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today. Carolyn Michelli, head of investor relations. Please go ahead.

Thanks Edie. Good morning everyone and thank you for joining us for a discussion of the EW Scripps Company's financial results and business strategies. You can visit Scripps.com for more information and a link to the replay of this call. A reminder that our conference call and webcast include forward-looking statements based on management's current outlook and actual results may differ materially. Factors that may cause them to differ are outlined in our SEC filings. We do not intend to update any forward-looking statements we make today. Included on this call will be a discussion of certain non-GAAP financial measures that are provided as supplements to assist management and the public in their analysis and evaluation of the company. These metrics are not formulated in accordance with GAAP and are not meant to replace GAAP financial measures and may differ from other companies' uses or formulations. Included in our earnings release are the reconciliations of non-GAAP financial measures to the GAAP measures reported in our financial statements. We'll hear this morning from Chief Financial Officer Jason Combs and then Scripps President and CEO Adam Simpson. Here's Jason.

Good morning everyone and thank you for joining us. We're reporting first quarter results today that outperform financial expectations despite the headwinds of uncertainty in the U.S. economy about tariffs, inflation, and recession. In fact, we've had a very good start to the year. We have successfully completed retransmission negotiations covering 25 percent of our legacy pay TV households. We continue to reduce expenses. We exceeded our expectations on Scripps Network's margin improvement delivering 870 basis points of improvement for the quarter well ahead of the 400 to 600 basis points we had promised for this year. And we close on our previously announced refinancing transactions. Every one of these moves in service to our commitment to improving operating performance and our balance sheet. Let's start this morning with financial highlights for our local media and Scripps Network's divisions from the first quarter. Then I will give some Q2 guidance and discuss our refinancing details and upcoming priorities. In the first quarter, local media division revenue was down 7.8 percent from the year ago period. Core advertising revenue was down 3 percent as we experienced hesitancy in advertising spending due to economic uncertainty. Local distribution revenue was down 5 percent year over year. Our contract renewals for 2025 took effect at the end of the first quarter and we'll see their benefits starting in Q2. Local media expenses increased only 1 percent from the prior year quarter, which is on the better end of our guidance of up low single digits due to lower than expected employee costs. Local media segment profit was $35 million, compared to $66 million in Q1 of 2024, an election year. For the second quarter, we expect local media division revenue to be down in the high single digit range with core revenue down in the low single digit range stemming from the continued uncertainty related to tariffs. We expect Q2 local media expenses to be up in the low single digit percent range. Now I'd like to review the Scripps Network's division first quarter results and guidance for the second quarter of 2025. In the first quarter, Scripps Network's revenue was $198 million, down about 5 percent from the year ago quarter. Connected TV revenue was up a very strong 42 percent in the quarter. We credit this growth to effective sales strategies and execution for our national networks, which are established on the major streaming services. ION is the largest contributor to our CTV revenue and we've been pleased to see strong advertiser support on CTV for the National Women's Soccer League since it started its new season in mid-March. We expect the NWSL and the WNBA to help drive revenue performance for the division in the second and third quarters. Another good Q1 results story for the Scripps Network's division is the 16 percent decrease in expenses. This significant decline came from tight cost controls and the reductions in Scripps News operations we announced in November. Disciplined expense management combined with effective advertising sales execution led to our highest margins in the division since the fourth quarter of 2022 at 32 percent. Network segment profit was $64 million compared to $49.7 million in the year ago quarter. For the second quarter, we expect Scripps Network's division revenue to be about flat and for the network's expenses to be down in the low double-digit range due to the aggressive expense management across a variety of functions in the segment. Turning to the segment labeled other, in the first quarter, we reported a loss of $6.4 million, the same as the year ago period. Shared services and corporate expenses were $22.6 million. For the second quarter, we expect that line to be about $22 million. Our EPS for the quarter was a 22-cent loss. That compares very favorably to the consensus EPS estimate even with the impact of the preferred stock dividend which has a negative impact on earnings per share even when we don't pay it. This quarter, it reduced EPS by 18 cents. First quarter results also included a $4 million restructuring charge that increased the loss to shareholders by 4 cents per share. Regarding our real estate asset sales, from late last year to today, we have completed transactions totaling $63 million. That includes the sale of five transmission towers and our West Palm Beach station building. At March 31st, cash and cash equivalents totaled $24 million and our total debt at quarter end was $2.6 billion. Net leverage at the end of Q1 was 4.9 times and we expect to continue to reduce our leverage ratio this year. On April 10th, we completed our refinancing transactions. No amounts remain outstanding on our term loans that had been due in 2026 and 2028 and for our old revolving credit facility. You can find the details on our new term loans due in 2028 and 2029 in yesterday's earnings press release as well as the details of our new revolving credit and AR securitization facilities. Just a reminder that despite the current elevated rate environment, these transactions only increased our blended cost of debt by less than 1% and we have now retired or extended the maturity of up to $1.5 billion of debt. We believe the completed refinancing transactions have positioned us well for the near term with a clear runway through mid-2027. We remain focused on using free cash flow to reduce the amount of our debt with debt and leverage reduction as our highest capital allocation priority. Furthermore, we continue to evaluate our remaining debt maturities as part of our efforts to further optimize the balance sheet. Here's Adam.

Good morning everybody and thanks for joining us. I'd like to start this morning's discussion by going back to our company priorities that I laid out a year ago. I spoke then about the season our business was in. Our team was focused on executing a plan to pay down debt, improve the balance sheet, capture the presidential election year opportunity in the local media division, and restore high margins to the Scripps Networks Division. I'm very pleased with the tremendous progress we've made in executing this plan. In one year, we have paid down debt and reduced our leverage ratio by nearly a full turn and are improving our balance sheet. This quarter, we delivered our highest Scripps Networks margins in more than two years at 32%. We captured record political advertising revenue to end 2024. We have deepened existing Scripps Sports partnerships and created meaningful new ones. And to start this year, our first quarter results beat expectations across the board due to strength in networks revenue, especially for connected TV and due to strong expense control across the enterprise. The priorities I described last year remain very important for us today, and now investors should see the track record of significant progress against each of them. Most importantly, what we have accomplished over the last year has set us up well to move successfully through the company's next season. Not far ahead, we see the prospect of local broadcast industry consolidation that will drive growth by finally allowing us to deepen our presence in our local markets, building upon the strong relationships we already have with viewers and advertisers to create even greater shareholder value with significant efficiency. We believe financial growth through our existing businesses is just around the corner. The basis for this opportunity is the deep local and national connections we have across this country, specifically created through our local news, live sports, and audience and advertiser relationships. We produce the news and information that connects people to their communities, that they depend upon, and that audiences seek out across multiple platforms to help them make sense of the world. And of course, equally critical, businesses from Wall Street to Main Street rely on our programming as a trustworthy vehicle for their messaging. At Scripps specifically, I'm very proud that our news teams have recently been recognized with a wide range of prestigious journalism awards for reporting that serves our communities and our country. Our Scripps News Network, which is carried within our local news as well as on most streaming platforms, has received awards this spring for its investigative work from the DuPonts, the Gracies, IRE, National Headliners, and the Deadline Club. Scripps News also was just nominated for an amazing eight National Emmy Awards. On the local news side, our investigative teams in Phoenix and Nashville have recently won DuPonts, National Headliners, and just announced last week, prestigious Peabody Awards, one for each of those stations. The National Association of Broadcasters awarded Scripps itself with its 2025 Service to America Award for our company's comprehensive coverage and disaster relief efforts in Florida following hurricanes, Helene and Milton last year. These awards recognize work that represents the very best of what journalism can be. Whether it is topics such as fentanyl abuse, mass shootings, hate groups, policing, natural disasters in severe weather, or the war in Ukraine, our news programs are providing life-saving and life-changing information to our audiences. They look to us to make their lives better and their communities richer. In turn, their connection to us is an asset we can and will actively strengthen to grow. In addition to our news programming, our Scripps Sports Growth Strategy is building real value in our existing local station and national network assets through live sports. Our local stations strengthen the connections we have with audiences and advertisers, tapping into the passion sports fans have for their local teams with our full-season team partnerships. Right now, our viewers are rooting on the Florida Panthers and the Vegas Golden Knights in the final eight of the National Hockey League playoffs. It's not only fans who are taking notice of the way we're bringing local sports to broadcast TV. This week, Nevada's U.S. Senator, Jackie Rosen, highlighted the Scripps Sports and Vegas Golden Knights partnership, describing the benefit of our free -the-air broadcast and other approaches to serving the local fan base. Beyond the relationships we have with NHL teams, we recently announced the new broadcast partnership with the WNBA's very popular Las Vegas Aces beginning this month. And it's possible we'll have additional announcements to come. Each new relationship is a core revenue growth opportunity for the local market. At our recent Scripps Networks Upfront event at Barclays Center in Brooklyn, the home of the WNBA's New York Liberty, we emphasized the strong cultural connection our nation has with women's sports and how Scripps is not just participating, we're leading this movement with our WNBA and NWSL franchise Knights. The event was also an opportunity for us to unveil our two newest women's sports properties for ION. The SI Women's Games, our partnership with Sports Illustrated, will entertain audiences with six nights of tournament play in an America versus the world format. The competition will take place this fall and is attracting the very best athletes to compete live in basketball, volleyball, flag football, tennis, gymnastics, and combat sports. A few weeks later, we'll broadcast the Fort Myers Tip-Off Women's College Basketball Tournament. To help us take even greater advantage of the advertising demand we're experiencing for women's sports inventory, we targeted these events in the fourth quarter after the WNBA and NWSL seasons have ended. Live news and sports aren't our only programming genres, but they are certainly the foundation for the connection we have with Americans nationally and in our local markets. There is no question that our service to community and Main Street has been threatened by outdated government regulations that have made it nearly impossible for us to compete on a level playing field with the big diversified media companies and big tech. It feels like we finally have the support of a Federal Communications Commission that understands the valuable role we play in local markets and the credibility we have that is unreplicated by any other source of local news and information. We welcome the opportunity to rebalance the business through regulatory relief, which will give us more operating leverage. With that, we will better serve our local audiences and advertisers, as well as the shareholders who benefit from those deep connections. Operator, we're now ready for questions.

Thank you. As a reminder, to ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. Please stand by while we compile the Q&A roster. And our first question comes from Daniel Kernos of the Benchmark Company. Your line is open.

Yeah, great. Thanks. Let me start quickly with the regulatory. Adam, obviously the rest of the space is at their moment to talk about what it means for them. There's a huge groundswell from the FCC. You just talked about it in your opening remarks. Given where you stand, the balance sheet and everything, how is Scripps best positioned to take advantage of some of the changes that might occur here?

Well, I mean, you know, you referenced the regulatory environment. I think it's fair to say that the Commission recognizes that local news, local sports, local programming, you know, entirely depends on the durability of local television. You know, standing in the way of that durability, we think are the rules that prevent consolidation, both in market and national consolidation, that's necessary for us to compete on that with the national media companies, the networks, that are right now already using their leverage to essentially impair our abilities to serve local communities. So for us, we believe greater scale nationally and greater depth in market are necessary for our assets to perform their best for shareholders and, you know, continue in service to the communities where we operate. So I expect we'll do everything in our power to take advantage of this moment. You know, I expect off the bat, given our balance sheet, our greatest opportunities would be both in swaps and in select asset sales.

Got it. Perfect. And then, look, you deserve a lot of credit on ION. I mean, the margins were tremendous in Q1. The guide to flat revenue in Q2, you know, it's a little bit of an easier pump, but still in this uncertain environment, that's pretty impressive. So maybe, I guess, a two-part question. One, you referenced sports helping drive performance in the back half of the year. CTV has been great. So how much visibility do you have? You just went to the up-fronts. How do we think about, you know, kind of performance in the back half of the year? And is the margin level, should we be thinking above and beyond your 400 to 600 basis points of improvement at this point? Or, you know, this is just the first step showing how much leverage there is in the model. Thank

you. So a couple things unpacked there. You know, first of all, I think on the up-fronts, I think what we can say is, you know, Adam talked about the events we had, and, you know, a lot of, I would say, positivity coming out of that. But frankly, it's really early. We are in the process of conducting hundreds of meetings and probably won't have a lot of concrete things to say specific to the up-fronts until we get to the next earnings call. But certainly a lot of excitement around the women's sports strategy there, the new assets we've added with the SI women's game in Fort Myers, so driving a tremendous amount of media coverage and interest. So more to come on the up-fronts, I would say, during the next meeting. Specific to the next network's margins, and so great results in Q1, the 30%. I would point you back to look at 32% – 32%, more than 30%, 32%. I would point you back to look historically that, you know, the network's margins for a variety of factors does bounce around some from quarter to quarter. So I don't think you can take that 30% and assume that's the margin every quarter as we go forward. I think there is a lot of positive, you know, things happening right now. But I also would point back to there's also a lot of uncertainty in the marketplace. So, you know, we're not changing that guide. I would also point to when you think of the 400 to 600 basis point improvement, some of the levers we pulled to drive that were pulled in the middle of last year. So I would fully expect that we are above that 400 to 600 basis points in the first half of the year because we are cycling past a time where we didn't have those embedded within our run rate. But in the back half of the year, we're going to cycle past some of those ascent items that were actually already realized in Q3 and Q4. And so I think you need to kind of think of the progression through that lens.

Hey, Dan, it's Adam. Just relative to network's revenue, I think what you're seeing is the manifestation of our live sports strategy, a disciplined approach to acquiring sports rights, sports rights that have generated significant demand in the market. Obviously, this season, NWSL and WNBA were sold out in last year's upfront. And at this point, we're now still extracting, I would say, fairly premium pricing for the scatter inventory that's left, though the demand has been very, very strong and our visibility is clear. There's not much left. And that's why you're seeing, I think, performance that pretty solidly beats our general entertainment network's peers in linear advertising. That and really outstanding performance by the team focused on connected TV.

Got it. And that's a very helpful color. Jason, just to be clear, I didn't run out the 32, but don't sell yourself short. I mean, that was a very strong quarter. Thanks, Dan.

Thank you. Our next question comes from Craig Hooper of Hooper Research Partners. Your line is open.

Great. Thank you. Let me start with just a numbers question here. Your employee compensation and benefit line in Scripps Networks was down 30%, 31% year over year to roughly $21 million. How much volatility should we expect in the dollar amount of that as we play out the rest of the year here? I mean, can you actually hold employee costs in Scripps Networks into a low $20, $21 million range for the rest of the year? First question, please.

Yeah, I mean, as I said earlier, there's always a little bit of variability from quarter to quarter. But yeah, I would say in general that we reset things through the actions we've taken to a much lower employee cost base in that segment. And I would expect that to continue as we progress through the year.

Okay, great. And then on the advertising front, maybe a little more detail about some of the advertising categories out there, maybe on the TV station side, for example. I'd love to hear how Auto did in the quarter, what your outlook is for the new quarter here. Maybe touch on maybe retail and services as well, if you could, please, the TV stations.

Yeah, so I can start with, I'll first start with Q1 and I can talk a little bit about our Q2 guide. So, you know, as we said, core revenue was down about 3% in the prior year, really driven by a variety of factors kind of from a line of revenue perspective. Local was the local piece of core was more stable than the national piece where we saw sort of the largest decline. The US is about categories. I would say looking back, automotive and retail were the worst performers in the quarter. I think you can certainly point that back to the macroeconomic environment right now. Services and home improvement were down a little bit, but I would say generally stable in the quarter. And actually for us, one of our top five categories, gambling was actually up in the quarter, tied mostly to the local sports deals that we have. From a Q2 perspective, we gave a guide of low single digits. That was actually, I think, slightly better than some of our peers who are kind of more in that low to mid. You know, the down is driven again by auto and retail. You know, actually in April, four of our top five categories were up, largely driven by the benefit of sports, specifically the NHL Playoff Series in Las Vegas and in South Florida and then also, I would say, a favorable NBA footprint for us on our ABC stations. But many of those categories, once those things sort of played out in April, flipped back to down in May. So it's largely, again, auto and retail that are driving things. We're certainly navigating a lot of uncertainty right now, but I will point back to I think that our guide is a little bit better. And it's really tied back to some of the positive things we saw in April on our sports properties.

I appreciate that. And could you maybe quantify how auto and retail did in the first quarter? Is that percent change dramatically different? I was looking so far in this quarter.

I would say that in general, it is probably fairly consistent as you move from Q1 to Q2. I know a couple other peers were also asked kind of Q1 to Q2 comparisons. I would say generally Q1 to Q2, if it weren't for sports, might be, Q2 might be slightly worse than Q1 in terms of pacing, but the sports has helped us sort of offset that. Auto was down kind of in the low double-digit range in Q1. Retail more in kind of the -single-digit range.

Okay, I appreciate that. Is there any more real estate asset sales you're expecting? Any significance for the rest of the year?

There's nothing we're expecting right now. It doesn't mean that something couldn't pop up. We are continually looking at our footprint, looking, you know, if there is demand in a certain market for the locations that we have. But right now, you know, we've delivered $63 million in asset sales from a real estate perspective and don't have anything else in the queue right now.

Okay, thank you for that. Back on advertising again for Scripps Networks. Looking for it to be flat-ish in the new quarter year over year. Can you talk about some of the categories that are doing better and worse than that? I mean, I'd particularly love to hear how direct response is doing. Anything in there? Sorry, I can talk about that.

So I'll start here and then Adam can add in potentially a little bit of additional color. So from a Q2 perspective, yeah, we said, you know, flat. You know, I think that when you're looking at Q2, we expect to see continued strong connected TV growth. A little bit of a stronger scatter market than we saw in Q1. And I would say a modestly improved DR marketplace largely tied back to having a full slate of sports that we're wearing on ION in the second quarter with both the WNBA and WSL. And I'll just kind of point back to Adam's point he made a couple minutes ago. You know, our Q1 performance and our Q2 guide both, I would say, materially better than our peers. A lot of them in Q1 were down 10 to 15 percent versus are down 5 percent. And I do think that is tied back specifically to our sports strategy that we're deploying.

Yeah, I would point out to the fact that, Craig, during last year's up front, we saw significant demand for these sports assets that Bridge, second and third quarter. And while tariffs and uncertainty in the economy, I think, has a big impact on advertising in general, this is going to we're going to see a period where advertisers will flock to the most valuable and most premium inventory available. And, you know, it's another validation, I think, of our investment in women's sports and our deepening of our commitment to bringing premium inventory opportunity to ION.

Okay, my last question, I promise. You guys talked about in your press release, Retrans revenues expected to be flat year over year in the second quarter and the same for the full year. I'm curious, your Retrans subs, what percent were they down year over year in the first quarter? I think recent quarters, as you guys have said publicly, it's down about 5 percent. Did that trend continue in the first quarter? And what's embedded in the remainder part of the year, more of the same, down roughly 5 percent or so?

You're correct. Yeah, we were down mid-single digits for the most recent 12-month reporting period. That's in line with our trends. That's also in line with what we assume in our forward-looking modeling. Certainly, recent earnings reports from some of our distribution partners have shown, I would say, some marginal impact in their subchurn, and we continue to monitor that and hopeful that that does, over time, play its way into our numbers as well. But at this point, to be conservative, we've continued to assume the down mid-single digits.

Okay, great. Thank you both. Thanks, Greg.

Thank you. And our next question comes from Avi Steiner of JPMorgan. Your line is open.

Hi. Thanks for taking the questions to broad categories as I can. First, on the cost-safe side, the company has done a great job on the Scripps Network side of the business. And I'm just wondering if you could transfer that discipline expense management and find opportunities, perhaps, on the local media side of the house to help offset some of this top line on your political absence. And then I've got one more. Thank

you. Sure, Avi. Actually, over the last couple of years, if you were to take a look at our expense run rate, you would recognize that we've actually pulled a number of levers that have saved significant expenses. In the local media division, I would say certainly we're looking at the opportunity for local market consolidation to be a tailwind for expense savings as well and for accretion. So I think we're continuing to look at new opportunities to leverage technology through transformation, particularly with AI that will make our operations more effective and more efficient, the potential for additional centralization. But for the most part, I think we've generally pulled those levers. And with the exception of increased costs associated with sports rights that were incremental for this year, our local expenses have been, I think, a pretty solid performance as well. There's probably not the significant lever pull that you see in local that we've been executing in networks, but I would expect that we will continue to manage expenses very, very carefully throughout the year.

I appreciate that very much. My second question, and then I'll let you guys go, it's a two-parter, but on the FCC deregulation front, I appreciate the earlier comments on swaps and sales, but maybe two. One, I'm curious if any of the prospective ownership rule changes at the FCC might impact the ION side of the business first. And then secondly, beyond ownership rules, curious whether the FCC can deliver other benefits, including maybe how they view virtuals. And if you were able to negotiate directly with them, how might that boost your top and bottom line? And again, thank you for the time.

Yeah, Avi, I would say on the second question, we're certainly looking forward to the opportunity for greater operating leverage to help us improve the durability of the business, whether that's in our ability to negotiate for what I would characterize as an appropriate level of compensation for us from the networks to the potential for the FCC to change the way they think about virtual MVPDs. Just because it comes in over the Internet doesn't mean it's in any way fundamentally different than a traditional MVPD. And I think the NAB and local affiliates like ourselves have long been calling on a change there. Were virtual MVPDs to be treated the same as MVPDs, we think there would be a lot more upside in our opportunity for direct negotiation with those virtual MVPDs. And we think there'd be additional benefit to the people of this country who would then have the opportunity to also watch, like many of our independent stations that today carry local broadcast sports, but are not being carried right now on virtuals because we don't have the operating leverage in order to ensure that they get carried on those virtuals. It's really just the fact of the people in these communities are missing out if they are a virtual MVPD subscriber. So we certainly look forward to that. I think there's also, you know, you may have read how Commissioner Simington's proposal looks to potentially cap reverse. You know, we think the Commission recognizes that things have gotten to the point where the networks are using their economic leverage to control the airwaves, which is essentially a de facto violation of communications regulations. So, you know, the networks ought to be taking this moment as a call to action to address the issue proactively instead of waiting for it to be regulated. And we think that's also a very good catalyst for value creation for shareholders for the industry. And now I've forgotten your first question, Avi. Remind me. The

first one was just if any of these perspective ownership rule changes and other changes you just talked about might impact the ION side of this. Thank you again.

Yeah, I mean, I think certainly ION is a broadcast network. And when we acquired ION, we were, you know, constrained with how many of the local stations, the local transmitters we could acquire because of the impact it would have on our cap and on in-market rules. We believe there could be opportunity for changes in the regulation to open up the opportunity for us to bring in more of the ION stations. And in doing so, eliminate some of the op-ex today that is a drag on ION margins. One of the opportunities when we acquired ION was owning our own spectrum instead of with our networks instead of leasing it. And the same continues to hold true with ION. When the rules change, the opportunity for us to own more of our own distribution will be a tailwind to networks margins. Appreciate the time. Thank you. Yeah, thanks, Avi.

Thank you. And our next question comes from Michael Kopinski of Noble Capital Markets. Your line is open.

Thank you. And thanks for taking my questions. I was wondering if you can quantify the advertising lift that you're receiving from gambling advertising as you expand your sports on both local and network. Is that a category that is differentiation from you and your broadcast peers? Are there other categories that you see a lift related to your sports programming? I was just wondering if you can add some color on the difference that you're seeing in your patients versus others.

So, I think that, you know, in April, four of our top five categories were actually up. And so I do think we see the benefit of those playoff series that played out on our airways in April across a variety of categories. You know, gambling has been one that's certainly in the markets where we have local sports. There's obviously a very close tie in between sports

betting

and the sports that we're airing. So we typically do see in those markets, you know, strong stronger gambling gambling category growth than we do in markets where we don't have local sports.

Gotcha. I was wondering if you can give us an update on Edgebeam. Is the CEO in place there? Does it have the funding? Is there an estimate on how much revenue is it may contribute this year? What is your outlook on that at this point?

Yeah, Mike, we are close on the CEO. Just as a little context, you know, the JV brings together Nexstar, Sinclair, Gray and Scripps, you know, really the four most powerful broadcasters into one platform to reach 97 percent of US households. No, I would not put anything in your models for Scripps or really, you know, the broadcast sector yet on Edgebeam. There's two ways Edgebeam is going to be a catalyst for value creation. First, as an equity owner, we will create value for Scripps through this joint venture. And second, and what I would characterize as sort of the one that you ought to be most focused on, every one of the broadcasters associated with Edgebeam also will have or has commercial agreements with Edgebeam for the use of our spectrum for data casting. And bringing all of us together as a broker in the marketplace, really as a catalyst to make the market, we believe will help create value at the broadcast company level as we begin to bring in clients that want to lease contiguous spectrum across the nation. But I would not put anything, you know, I do believe we'll see revenue this year, first revenue at Edgebeam, but I do not believe the companies will see material revenue this year.

And Adam, I know that I think that you've met with the FCC and the administration recently, and I was just wondering, you know, there is a lot of initiatives there at the FCC in talking about deregulation and so forth. Do you have any sense of the timing or how this might move along? I mean, you know, obviously we've been disappointed in the past where the FCC indicated that they are willing to lift ownership restrictions and then it never happened and, you know, got bogged down in Congress or whatever. I was just wondering, what is your sense of the timing of this?

Yeah, I mean, I think you're going to start seeing announcements from the industry relatively soon. We have to be mindful of the fact that it's still a 2-2 FCC and we're waiting on the full Senate confirmation of the last commissioner to be seated, trustee. I think once that happens, I think the commission will be in a much better position to actually make changes to the regulations under Chairman Carr's Delete, Delete, Delete initiative. But even before that, it wouldn't surprise me, you know, if swaps or deals were brought in front of the FCC under the assumption that it's going to take some time for them to make its way through the process and or for the process to be hastened a bit through waivers. So this is not like in the past when, you know, we were, I think, trying to improve our business within the constraints of very arcane rules. This is a commission that recognizes that local news, local sports, local programming, you know, they depend on this commission taking action in order to level the playing field. You know, I think the chairman rightly recognizes that we need greater economic leverage because otherwise we're witnessing, you know, de facto control of the airwaves by the networks. And I believe that the commission will act in a way that, as I said in my prepared remarks, rebalance the marketplace. By the way, not in a waiver that's going to not in a way that's going to favor us, but in a way that just makes it fair to the American people that rely on local TV news, sports and programming. And of course, this will benefit our shareholders who invested in this mission.

Adam, thanks for that color. I really appreciate it. That's all I have. Thanks. Thanks, Mike.

Thank you. And our next question comes from Shana Q of Barclays. Your line is open.

Hey guys, thanks for taking my question. Congrats on extending your term limitaries in April. Appreciate you guys are focused on deleveraging. Can you provide an update on your 2027s? Are you guys still actively engaged in looking at options to refinance those?

So thanks for the question. As you point out, we were really pleased with the refinancing that we completed and it does kind of clear that runway through 2027. I can't say much more than that we continue to evaluate our remaining debt maturities as part of our efforts to optimize our balance sheet and probably can't say much more than that at this point.

Hey, great. Thank you. And then last one for me. I know some of your peers have reported political benefits from the Wisconsin Supreme Court race. It seems like you guys might not have benefited as much even though you have a top station in Milwaukee. Can you comment on the dynamics that you guys saw there and how we should think about that pulling into political going into next year?

So I think I can speak to Q1 and then Adam probably speak to kind of the bigger picture. We did have some benefit that rolled through in that political number that we reported for Q1 tied specifically to Wisconsin. And I think that when you look beyond that, there wasn't a lot of other political across our footprint. But certainly we did see and we have two stations in Wisconsin and we saw we did see some dollars flow through those races as a result. Do you want to talk more broadly?

Yeah, I mean, I just to reiterate, we did we did see the benefit in Wisconsin. You know, quite frankly, I mean, given revenue in the first quarter, it wasn't hugely material for any of us, but it was nice to see. And I think a positive a positive outcome, a reaffirmation of television's power for for for political that that it will continue. There's, you know, I think the potential for additional political revenue ahead with Virginia's gubernatorial race. But overall, I mean, I think it's going to shape up to be a pretty typical off cycle year, with the exception that it's always possible that the environment we're in will spark earlier spending on the midterms. And I think there's a lot of money sitting on the sidelines right now waiting to determine what the strategy will be. We know when that strategy is set, that money will be spent in local broadcast television.

Yeah. And just to reiterate, I think when you're kind of talking full year, I would if you look back over kind of our historicals, an off year for us is typically kind of in that mid 20s million dollar range. And so I think that is, you know, aligns with our expectations for this year.

Great. Thank you,

guys.

Thanks,

Hannah.

Thank you. And our next question comes from Hal Steiner of BNP Paribas. Your line is open.

Hey, guys. Thank you so much for taking my question and congratulations on the solid quarter and guide. Could you just share what the pro forma cash balance was at the end of the refinancing transaction in April?

Yeah, I will have to get that number for you. I know at the end at the end of the quarter, we had twenty five million dollars. We did draw up on the revolver as at the closing to help fund fees and such with the plan to pay it down throughout the quarter. And so I will have to get the number. I don't have them with fingertips.

Got it. Is it right to expect that that revolver balance would be mostly paid down by the end of the quarter? I guess what I like just did the walk like I think it's like roughly three hundred and seventy million of the term loans like came out and then you did a 360 draw on the A.R. facility. So it seemed like that decently matched that. So I was just a little surprised that like the draw close was 170, but it seemed like that's transitory and it got me down.

Yeah, I would not. I would say yes, it will come down. I would not expect it to be paid off by the end of the quarter. I think the expectations is paid off by the end of the year.

Yes. Got it. Great. Great. OK, great. Thank you guys for taking my question.

Thank you. And our next question comes from Stephen Cahall of Wells Fargo. Your line is open.

Thank you. First, just on the solid networks guide in the second quarter, I was curious how much of that revenue is already committed. I'm guessing it's quite a bit, but we'd just love to get your thoughts on the visibility there. And sticking with networks, I imagine programming costs are up this year as you move into more and more sports on ION. So is it correct to think about the cost action you've taken at networks is even more aggressive than what we're seeing because there's some underlying content cost growth within the network?

No, I mean, on the second question, yes. You know, obviously, there are typical step ups in sports rights programming. And I think you're pointing out something that we probably should have pointed out ourselves. We are making strategic changes to the programming strategy. And to fund those changes, we're cutting, but what you're seeing is still essentially very significant improvement in the OPEX at the network side, even with that subtle, I would say, and very disciplined growth in programming expense due to sports.

Yeah. And in terms of sort of Q2 revenue guide, what I would say is we do have a high degree of confidence. We have probably around low 80% committed at this point. We continue to close more every week as we progress through the quarter.

And then, Jason, just following up on local, what's driving the low single digit expense guide in the quarter? I would think that as you're comping a bigger political year, that reduces some costs like commissions. So just curious what that is causing that expense growth at local and Q2.

Yeah. And so it's really primarily being driven by the programming line and primarily by sports programming. We have some new sports assets. Those costs do bleed into the second quarter through sort of the end of the season and through the playoffs. And so if you back out sort of the programming line, all other expenses, I would say, are flat.

And then the last one, kind of speculative, Adam, on the deregulation front. There's been a lot of focus on virtual MVPDs, and I think that's been one of the subjects of the NAB as well. If the national networks do provide that negotiating right back to local stations, but the FCC is not involved in regulating what exactly a VMVPD does or doesn't have to do, do you think that's still a big revenue opportunity for you all? I guess what I'm asking is, if you're kind of just negotiating for the value of your local content with the virtuals, do you think you can generate more revenue than what you get from them today?

Absolutely. I absolutely do. And that's from the evidence that we've had in the past. Every one of these, every one of the most successful virtual MVPDs knew they needed the local affiliates and the local streams in order to actually launch and to get to a level of scale. So I do think we would be in a better economic position. I also think it would finally open up the opportunity for the virtuals to be in a better position to negotiate with us for the independent sports stations as well. I mean, these are things that we believe are significant catalysts.

Would you care to size what that uplift could be? No. Fair enough. Thought I'd try. OK, thank you. Yeah.

Thank you. This does conclude our question and answer session and today's conference call. Thank you for participating and you may now disconnect.