Sinclair Broadcast Group, Inc. (NASDAQ:SBGI) Q2 2023 Earnings Call Transcript

Sinclair Broadcast Group, Inc. (NASDAQ:SBGI) Q2 2023 Earnings Call Transcript August 2, 2023

Sinclair Broadcast Group, Inc. misses on earnings expectations. Reported EPS is $-0.03 EPS, expectations were $0.58.

Operator: Greetings, and welcome to the Sinclair Second Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note this conference is being recorded. I will now turn the conference over to your host, Chris King, Vice President of Investor Relations at Sinclair. You may begin.

Chris King: Good afternoon, everyone, and thank you for joining Sinclair’s second quarter 2023 earnings conference call. Joining me on the call today are Chris Ripley, our President and Chief Executive Officer; Lucy Rutishauser, our Executive Vice President and Chief Financial Officer; and Rob Weisbord, our Chief Operating Officer and President of Local Media. Before we begin, I want to remind everyone that slides and supplemental information for today’s earnings call are available on our website, sbgi.net, on the Investor Information page and on the earnings webcast page. Following shareholder approval and closing of our holding company reorganization, we recasted our financial results on a quarterly basis for 2022 in the first quarter of 2023 to conform with the new organization structure and reporting.

Those updates are available on our website for the revised segment reporting. For questions about our recasted financial statements, please reach out to our Investor Relations team sometime after this call. Certain matters discussed on this call may include forward-looking statements regarding, among other things, future operating results. Such statements are subject to a number of risks and uncertainties. Actual results in the future could differ from those described in the forward-looking statements as a result of various important factors. Such factors have been set forth in the company’s most recent reports as filed with the SEC and included in our second quarter earnings release. The company undertakes no obligation to update these forward-looking statements.

The company uses its website as a key source of company information, which can be accessed at www.sbgi.net. In accordance with Regulation FD, this call is being made available to the public. A webcast replay will be available on our website and will remain available until our next quarterly earnings release. Included on the call will be a discussion of non-GAAP financial measures specifically adjusted EBITDA, adjusted free cash flow and leverage. The company considers adjusted EBITDA to be an indicator of the company’s operating performance and the ability to service its debt. The company also believes that adjusted EBITDA is frequently used by industry analysts, investors and lenders as a measure of valuation and ability to service debt. The company also discloses segment adjusted EBITDA as an indicator of the operating performance of its segments in accordance with ASC 280 segment reporting.

The company considers adjusted free cash flow to be an indicator of the company’s operating performance. The company also believes that free cash flow is a commonly used measure evaluation for companies in the local media industry. In addition, this measure is frequently used by industry analysts, investors and lenders as a measure of evaluation for local media companies. These measures are not formulated in accordance with GAAP, are not meant to replace GAAP measurements and may differ from other companies’ uses or formulations. The company does not does not provide reconciliations on a forward-looking basis. Further discussions and reconciliations of the company’s non-GAAP financial measures to comparable GAAP financial measures can be found on our website, www.sbgi.net.

Any discussion of pro forma numbers as compared to 2022 will exclude Diamond, which was deconsolidated on March 1, 2022 and any business sold since the beginning of 2022. We for actual results, including the period that Diamond was consolidated, please refer to this morning’s earnings release. In addition, due to the pending Diamond litigation, we are unable to comment on any specifics regarding the legal issues surrounding Diamond’s bankruptcy or any potential financial impact that may or may not occur as a result of those matters other than to say that Sinclair firmly believes that it has meritorious defenses to the allegations in the diamond lawsuit, and we plan to vigorously defend against them. Let me now turn the call over to Chris Ripley.

Chris Ripley: Good morning – sorry, good afternoon, everyone, and thank you for joining us. I’ll start on Slide 4, as I would like to begin by discussing the holding company reorganization that was approved by our shareholders in late May and which closed on June 1. Under the new structure, Sinclair Inc. has become the publicly traded parent of Sinclair Broadcast Group and Sinclair Ventures. SBG holds the pure-play local media assets, while a newly formed subsidiary, Syncline Ventures holds the company’s nonlocal media assets. The intent is to provide the investor community with greater transparency of financial results and disclosures on the value drivers of the business, while increasing both operational and financial flexibility for creating value within the company.

In addition, we are now disclosing more financial detail about the operating results at Tennis Channel, which is now a separate reporting segment as well as more information regarding management’s estimates of fair market value for our non-media assets, including our investment portfolio. The reorganization will allow more transactional flexibility and transparency around the sum of the parts valuation analysis, which I will discuss in more detail shortly. Additionally, Ventures will now have more flexibility to potentially access additional financing, whether debt or equity to further grow or invest in these assets. While our pure-play focused Local Media division will continue to transform and unlock overall value for the organization. Turning to Slide 5.

We remain firmly committed to the local media industry, which is our legacy and core business. However, increased competition from technology companies, streaming content providers and the networks as well as continued regulatory constraints, means that we must transform to remain relevant and to grow impressions and revenue share. We must also embrace technology, which is why we’re earmarking 75 million this year for cloud technologies, automation and ad sales platforms, data distribution, yield management and a customer data platform. Due to a combination of timing and permanent cost savings, we now anticipate spending approximately $65 million on these efforts during 2023. Over the next 12 months, we intend to allocate capital to marketing services, multi-platform content community interactivity, next-gen broadcast and cloud technologies.

Our next-gen broadcast plans remain a key focal point of this transformation. The migration of [indiscernible] and distributed data products will allow our industry to unlock the value of our significant spectrum holdings through new revenue and cash flow streams. And despite net leverage increasing this year, in part due to our investment in broadcast and net retrans renewal timing, we believe the changes and investments we are making will drive broadcast future returns and free cash flow leading to reduced debt over the coming years. We intend to remain keenly focused on strengthening the balance sheet as we continue to execute on our business strategies in the coming quarters. Turning to Slide 6. I wanted to provide a brief governmental update regarding several key items for Sinclair as well as the broadcast industry at large.

In mid-June, the Senate Judiciary Committee passed the journalism, Competition and Preservation Act which would allow broadcasters and other news production organizations to negotiate directly with large big tech platforms for widespread content distribution. Also in June, Senator Cantwell, expressed public support calling on the SEC to initiate a process to update the definition of MVPDs to address the rise of live streaming video services and to allow direct negotiation of carriage between virtual MVPDs and broadcasters. In addition, at the annual NAB Show in May, FCC Chairwoman Rosenworcel, announced an NAB-led leadership group to grow — to work through the issues related to the broadcasting industry’s ongoing transition to ATSC 3 panel for next-gen broadcast services.

This should help facilitate the wind-down of the older ATSC dose standard which will open up more spectrum capacity for future services. We are pleased with all 3 of these significant governmental developments, and we look forward to working with legislators and regulators regarding these crucial issues for broadcasters over the coming months. On Slide 7, Ventures strategic path is about amplifying its approximate $1.25 billion portfolio with a focus on shifting from mostly minority owned to majority owned and consolidated growth investments. Our diversified portfolio of investment assets has delivered strong results in the past, returning an IRR of 19% over the past 10 years and our target for future investments is to have an IRR threshold goal of 15% to 20%.

We look forward to sharing further developments regarding this asset portfolio in the months ahead. Turning to Slide 8. We are disclosing separate financials for Tennis Channel for the first time as part of our increased disclosure for Sinclair Ventures. During the second quarter, Denison [ph] reported $60 million in total revenue and $8 million in adjusted EBITDA. We note that there are some seasonality associated with Tennis Channel’s financials, particularly on the operating expense side, largely due to production costs associated with the coverage of Roland-Garros, which occurs during the second quarter. We expect full year revenues to be in the range of $223 million to $226 million, while adjusted EBITDA is expected to be in the range of $53 million to $56 million.

This includes approximately $14 million in net operating expenses to fund the growth initiatives, including direct-to-consumer, Tennis Channel International, T2 and BikoBall [ph] As seen in Slide 9, we’re also presenting greater disclosure around Ventures investment portfolio, which includes nonmedia assets and excludes Tennis Channel and Compulse along with the current methodologies for calculating the fair market values of the various assets. As you can see, management’s estimates of the value of these assets includes the current cash position, reflecting a total portfolio value of $1.25 billion. As a reminder, these assets have generated a 19% internal rate of return over the last nearly 10 years. During the second quarter, Sinclair made investments of approximately $6 million into the portfolio of investments and received distributions of approximately $5 million.

Going forward, part of the strategy in Sinclair Ventures will be reducing our minority stake investment stakes over time and focusing more on majority investments that we can operationally and financially control. Turning to Slide 10. I wanted to highlight the current valuation discrepancy between our estimation of the fair value of our assets and our current enterprise valuation. As seen in the table, our current total enterprise value as of July 26 was $44 billion. We signed an approximate 1.25 billion valuation of the assets held in our investment portfolio, as seen on the previous slide. We have signed an approximate $1 billion valuation for Tennis Channel and Compulse based on Tennis Channel’s EBITDA using a 12 times trailing 12-month multiple and a 2 times gross drilling multiple for Compulse.

When combined, this yields an estimated approximate $2.3 billion fair market value for Sinclair Ventures, assigning a 7 times adjusted EBITDA multiple for our Local Media segment, which is in line with recent trading comps on an average, 8 quarter basis yields a local media fair market valuation of $5.7 billion. Taking into account the approximate $50 million of annualized unallocated corporate expenses, this yields an estimated total implied fair market value for the company of approximately $7.6 billion, suggesting a current equity discount of almost 80% with an implied share price of approximately $65. While we realize and acknowledge a current discount on our capital structure due to several issues, including some uncertainty related to the Diamond scores bankruptcy outcome, we believe the deep discount on the fair market values of our current asset remains unjustified.

Management is keenly focused on closing this valuation gap as we continue to invest in both our local media and venture assets and businesses. One of the ways we expect to close this valuation gap is through the transformation of our traditional broadcast business. Turning to Slide 11. Work continues on our next-gen broadcast core network and platform. We currently expect to go live in the first quarter of next year. This network will create an interconnected platform to provide commercial services and solutions for national data distribution and represents what we believe to be the next step in the evolution of the broadcasting industry. Slide 12 highlights recent developments for NextGen broadcast. To date, we are live with NextGen broadcast in 41 markets, including recent launches in South Bend and Reno, which represent approximately 69% of the TV households in our licensed footprint.

By year-end, Sinclair will have deployed NextGen in over half of our 86 markets covering 74% of our covered population. The industry has also committed to launching an advanced emergency formation pilot project to disseminate crucial information with enhanced broadcast features. We currently expect NextGen revenues to begin in 2024 as the technology grows towards BIA’s midpoint forecast of $10 billion in industry revenues by 2030. I will now turn the call over to Rob for operational highlights.

Rob Weisbord: Thanks, Chris, and good afternoon, everyone. Our commitment to our local media platform remains strong. Sinclair reaches 1 in 3 Americans on a daily basis, more than 100 million people plus. We are launching 25 local fast channels in addition to expanding Tennis Channel into new international markets as well as expanding the network’s T2 fast channel. We continue to invest in our social media and digital content, including hiring Nicolas James, a veteran of HBO Max, Conde NAS and to head our social and digital content initiatives that drive our growth and engagement strategy. This joins Richard Cook, Vice President of Audio Programming; who was brought in to create compelling local content delivered to audio deciders.

We are a premier cross-platform producer and distributor of local media on every platform, wherever, whenever and however our viewers, listeners want to consume it. Nick and Richard will create the digital bolted that links our 2,500 hours plus of weekly local news and the national desk content for our compelling and distinctive digital content. Before coming to Sinclair, Richard oversaw the launch and growth of a dozen of podcast at Cadence13 and has worked as a producer across ESPN radio, TV and digital assets. Turning to Slide 13. I wanted to take a minute to provide some color around our distribution revenues. Several weeks ago, we announced a distribution agreement with Hulu 0they have carriage of Tennis Channel, T2, Common and charge to Hulu Plus Live TV beginning in January of 2024.

During the second quarter, we began our new carriage agreement with YouTube TV which now has access to Tennis Channel, P2, Chart and TBD as of June 1. In addition, as a reminder, with respect to our upcoming retrans renew cycles, we have material renewals coming up during the second half of this year and into 2024, which combined represent approximately 90% of our big 4 subscribers. These renewals are expected to drive both top and bottom line growth to achieve our guide of a 3-year CAGR of net retrans growth of low single digits. In addition, we anticipate our reverse retransmission agreements to have modestly improved terms as the industry takes into account current subscriber churn levels as well as the loss of some additional exclusivity as networks with wholesome content for their own streaming products.

Churn during the second quarter was slightly better than our internal expectations. However, we continue to anticipate linear subscriber churn to continue at elevated levels for the entire industry. We still believe, however, that broadcasters are not at parity with respect to retransmission revenues and that the industry is not adequately compensated for the programming content and audience share that we consistently bring. Notably, turning to Slide 14. A study conducted by the Television Bureau of Advertising earlier this year, found that local broadcast needs has 8 to 12 medallion pression [ph]]with only a fraction of the total number of programs of major streaming platforms. The study reviewed 1 day of SVOD audiences versus the same 1 day at Linea broadcast TV audience for local broadcast news program.

Local broadcast news remains a key pillar of the view and engagement across the country and is a key factor in our belief that local broadcast is not being adequately compensated for such programming today. We discuss our current core advertising trends for the Local Media segment on Slide 15. For advertisers, excluding political fell by less than 1% in the quarter on a year-over-year basis. Auto continues to be a strong performer for us with that category up 6.5% year-over-year. We believe our drive auto platform allows us to clearly differentiate ourselves in the marketplace from a Tier 3 dealer perspective Overall, legal services continued to perform well during the quarter. but most other service categories led by insurance recorded year-over-year declines.

As we begin to look at early third quarter trends, 4 advertising trends appear to be largely unchanged from second quarter trends with a notable exception of national advertising, which is improving over the past month. On Slide 16, I wanted to provide an early preview of what we believe will be a strong 2024 for political advertising. As shown on the slide, Sinclair stations in 23 of the 34 states with Senate races in 2024, 7 of the 11 states with Guminatorial [ph] races and 10 of 12 presidential swing states, as defined by a close 2020 presidential race in those states. This spending is also heating up with cannabis, immigration, abortion, gun control education and sports gambling all expected to drive incremental political spend over the next 18 months.

We have already booked $9 million in political revenue during the first half of 2023 including $5.5 million during the second quarter, which is almost 10% above our political revenues booked during the second quarter of 2021. Early fundraising totals and political advertising that we are already seeing suggest another record year for overall political advertising in 2024. On Slide 17, I wanted to take a brief minute to highlight our broadcast awards received in just the past quarter. This includes 23 Edward or more award for outstanding journalism, a Sports Emmy Award for writing long form and 4 tele awards for news and news feature reporting for full measure with Cheryl Atkinson. In addition, our local Baltimore Fox affiliate WBFF, was honored with two prestigious awards in the quarter.

First, by investigative reporters and editors for its reporting on the further more public school system, disposing how students with disabilities were denied at proper education. The station also on the national Sigma Delta Chi Award for investigating reporting for its Project Baltimore reporting unit from the Society of Professional Journalists. Project Baltimore also won the prestigious investigator reporters and editors award for fourth year. In addition, for Sinclair podcast were recognized as best in their respective regions. In total, so far this year, Sinclair has won 180 regional awards with – and 14 national awards for news operations. These awards underscore our unwavering commitment to provide the best in local journalism and news gathering and we are extremely proud to be so honored.

I want to congratulate all our award-winning journalists, who have been disciplined, diligent and unafraid about producing challenging stories. Turning to Slide 18. And as Chris touched on earlier, Tennis Channel continues to perform well with audiences up in key demographics across the board. Coverage rolling Gais [ph] in late May and early June with over 2,000 hours of coverage drove record viewership for millenia channel as well as viewership for T2 our live and VOD subscription service and Channel Plus. Despite [indiscernible] shifting a week later this year, second quarter ’23 average audience increased by 20% year-over-year in total viewers outpacing all other Ingles language sports networks. Live coverage of Roland Garros or total viewership increased by 13% over last year’s levels.

And the Jokovich operas semifinal match was the second most watched tenet channel match of all time. while Tennis Chas saw to average number of monthly subscribers increased by 17% year-over-year. Tennis also launched its e-commerce store tennis shop.com in early June during Rolling Daris with racket sports equipment e-tailer, Tennis Point. In addition, Tennis Channel continues to invest in its growth initiatives, including Tencent and national, T2, the network’s direct-to-consumer product offering which is tentatively scheduled the launch of March of 24 as well as pickable. We believe Tenneco is well positioned to deliver continued strong growth metrics in the months and years to come. Also of note, our Salt Lake City affiliate, KJ ZZ, known as Kaz, announced last month that it will be carrying all non-naturally televised games of the NBA’s Utah Jazz beginning in this upcoming season.

We’re already seeing high engagement from this content during the summer leak. I will now turn the call over to Lucie to share our financial results.

Lucy Rutishauser: Thank you, Rob, and good afternoon, everyone. Hitting on Slide 19. On a consolidated basis, we delivered media revenues during the second quarter at the high end of guidance as distribution revenue was modestly higher than expectations and core advertising revenue met our internal forecast. As compared to last year, consolidated media revenues decreased to $761 million during the quarter primarily on the absence of political revenues and to a lesser extent, the impact of year-over-year subscriber churn and softer national core advertising. On a pro forma basis, media revenue was $762 million in the quarter, which excludes divested assets and is comparable to the $828 million in the second quarter of 2022 and as seen on the right-hand side of the slide.

On Slide 20, consolidated adjusted EBITDA and exceeded the high end of guidance for the quarter on revenue performance and lower-than-expected expenses, driven by a focus on cost controls and timing. As compared to last year, on a pro forma basis, consolidated adjusted EBITDA in the quarter decreased from the year ago period, with media revenues contributing most of the decline as a result of the absence of political revenues which is not an apples-to-apples comparison as this year is not a major election year. Media expenses were up modestly in the quarter year-over-year due to annual compensation increases production expenses as well as our investments in technology and other growth initiatives. Corporate overhead, non-media EBITDA and other costs increased slightly year-over-year and were partially offset by lower film payments.

On Slide 21, shows our consolidated adjusted free cash flow results, which also exceeded our guidance for the quarter due to the revenue and adjusted EBITDA favorable results as well as lower-than-expected capital expenditures with other cash items being in line with our forecast. Adjusted free cash flow declined year-over-year on a pro forma basis primarily due to the decline in adjusted EBITDA, as just discussed on the previous slide, as changes in net interest, cash taxes and CapEx netted against one another. Slide 22 shows the consolidated results by segment with the Local Media segment contributing $111 million of adjusted EBITDA in the quarter and Tennis is contributing $8 million. Slide 23 walks through our balance sheet metrics. Our next meaningful debt maturity is the Term Loan B 2 in September of 2026.

Sinclair Television Group’s first lien net leverage was 4.1 times at the end of Q2, while STG’s total net leverage was 5.1 times. And Total company net leverage through Sinclair Inc. was 4.7 times , including all debt and cash on consolidated Sinclair Inc.’s balance sheet d using the trailing 8-quarter consolidated average adjusted EBITDA. Our consolidated cash position was $728 million at quarter end with $368 million of cash at SBG and $360 million of cash at ventures. During the quarter, Diamond repaid all $193 million outstanding balance of the accounts receivable facility and reduced the commitment to $50 million, which is currently undrawn. There were 63 million total shares outstanding at quarter end. And even though we believe our equity is significantly undervalued at current levels, we did not repurchase any additional shares since our May earnings report and instead, transitioned to open market debt repurchases — of note, we repurchased $32 million in principal amount of our outstanding debt in June and into early July across various debt tranches for approximately $21 million in cash.

This represented a weighted average discount of 35% to par and a weighted average yield to maturity of 13%. We anticipate continuing to be opportunistic regarding future repurchases of STG’s various debt tranches despite a significant lack of active sellers at current levels. Turning to Slide 24. We present our third quarter financial guidance by segment. On a consolidated basis, we expect total revenues to be between $742 million and $763 million with total media revenues of $733 million to $752 million, which is down 10% to 12% from pro forma year ago levels. The primary reason for the decline is due to the absence of political advertising revenues in a non-political year. During the third quarter of last year, we booked $89 million of political revenues versus $7 million to $9 million expected in this year’s third quarter.

In addition, a year-over-year decline in distribution revenue was estimated to contribute roughly $15 million of the decline at the midpoint of our guidance range, which is partially offset by a slight increase in core advertising revenues year-over-year. While we are not providing full year revenue guidance, we are providing an early call on fourth quarter political advertising which we expect to be approximately $25 million. On a consolidated basis, we expect third quarter adjusted EBITDA to be $91 million to $109 million, down from a pro forma third quarter last year adjusted EBITDA level of $201 million, again, primarily due to the access of political revenue the impact of continued subscriber churn with no material distributor renewals until later this year, higher network programming fees as well as our investments in technology, infrastructure and growth initiatives.

Adjusted free cash flow is expected to be in a range of negative $9 million to positive $14 million during the third quarter versus $173 million in the year ago period with the primary drivers of the decline, consisting of the lower adjusted EBITDA, higher interest expense, and over $50 million in primarily cash distributions from investments received during the third quarter of 2022. Slide 25 represents our new full year expense and certain cash flow guidance, notably with media expenses and CapEx coming in lower than prior guidance. And with that, I’d like to turn the call back over to Chris for some closing remarks before we do Q&A.

Chris Ripley: Thank you, Lucy. Turning to our key takeaways on Slide 26, Sinclair wrapped up a busy first half of 2023 with a — on a solid note as we met and exceeded our guidance expectations for the second quarter. While we continue to deal with increased linear subscriber churn levels, Sinclair is well positioned for the future with continued progress being made on our NextGen broadcast network and business strategies which we believe will begin to transform the industry in 2024 and beyond as well as our ongoing investments in technology, cloud transformation and our industry-leading sales platforms. In addition, we also completed the reorganization of our business units with the separation of SPG and Ventures providing improved transparency for our investors while providing us with much greater transactional and financial flexibility going forward.

We believe the current enterprise value of the company falls well short of the true value of the assets that we possess. In addition, I wanted to reiterate my earlier comments regarding our commitment to reduce debt levels over the coming quarters. We are also looking ahead to significant retransmission agreements that are coming up for renewal over the next 6 to 12 months, while preparing for what we believe will be a record year for political advertising in 2024. In the meantime, we continue to see increasing demand, both domestically and internationally for our tennis channel-related assets and programming, and we are proud to be recognized as one of the news journalism leaders in the local media industry. Sinclair is well positioned for the future, and we remain excited about the opportunities that lie ahead of us as we enter into the second half of the year.

Lucy, Rob and I will now open the call to questions. Thank you for joining us today.

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Q&A Session

Operator: [Operator Instructions] And the first question today is coming from Dan Kurnos from the Benchmark Company. Dan, your line is live.

Dan Kurnos: Great, thanks. Really appreciate all the incremental disclosure guys super helpful in kind of framing the argument Chris, I’ll give you the floor just to kind of go back on a question that I know you get a lot just in terms of the sum of the parts argument and getting investors for people to recognize that value you’ve laid out kind of a comprehensive strategy now for how the company is going to evolve going forward? And obviously, execution matters to some extent. But if the discount remains knowing that you guys are addressing the debt side, which you’ve done pretty well so far here. Just how do you think about your willingness to unlock incremental value or do additional things to unlock value the way that you think it should be perceived ?

Chris Ripley: Yes, that’s a great question, Dan. Thanks for asking. We — I think what you can take away from what just happened back in June that we’re very focused on unlocking this in value within the company. We backed that up with significant share repurchases now with more debt purchases. And we are very open to any and all strategies to maximize value at the end of the day. That is our number one goal here. So — we think this new structure will help tremendously. And — but we’re open to these suggestions and new ideas and always looking to get better.

Dan Kurnos: And in terms of adding to the portfolio, obviously, there’s a lot of rumors out there in terms of stuff that could potentially come for sale. I know you guys have to take that into consideration, which you created a vehicle for incremental financial flexibility. Is there any kind of target leverage or thoughts on size of what could be added in the majority stake components of what you talked about today?

Chris Ripley: Sure. Well, as you can see in the investment portfolio, — it now has over $300 million of cash. And so we do recognize that in terms of getting value credit, it would be much easier and better from a Wall Street perspective, if we had consolidated financials on that — on those investments. So that’s the big reason why we’re going to move away from minority investments, which has done incredibly well over the last 10 years, and we’re very happy. We did that, yielding over 19% IRR. But we also recognize that having underlying financial performance in our disclosure of our various divisions would be better. And so we’re looking at that $300 million of cash and thinking about how we can deploy that into a new investment or division, if you will, because it would be consolidated sometime in the back half of this year or early next year.

Dan Kurnos: Got it. And that’s helpful. And just maybe one for Rob. Just in terms of your commentary, we’ve heard — we’ve seen the upfront coming a little bit better than feared, I guess, I would say, National obviously has some really comps in the back half of the year. It sounds like insurance, in particular, is getting a little bit better. But is there anything that you can tell us in terms of conversations with advertisers just given all the noise out there between the strikes and everything else, just sort of what the underlying view is and how fluid the environment is right now?

Rob Weisbord: It’s still month-to-month basis, but we’re encouraged. We’re not seeing any significant cancellations and autos made its full cycle. So now it’s returning their inventory on the Tier 3 logs. We’re seeing Tier 2 money regional spending as well. dollars committed for the upcoming college and NFL pool seasons are being committed to now. So it leads us to believe that we’re robust on the return of ad revenue and also encouraged by the amount of issue and political dollars being spent right now. We have money being spent in Ohio, Pennsylvania Rhode Island, Iowa markets right now, and we expect further markets. But we’re pacing ahead of our second quarter performance right now for third quarter, which bodes well where Lucy gave the guidance earlier of $25 million for the fourth quarter.

And we firmly believe going into 24 that Sinclair will have another record presidential year. And so — and with our expansion of 25 fast channels that will be news focused, local news focused. — as inventory gets tight as an alternative source for the political dollars to be spent in the same genre that they buy through the broadcast wires. So it’s long-winded, but the key cater that we manage services is getting stronger even though still facing negative the legal category, which drives local business and automotive has been positive for the last couple of quarters. So I see the strength coming back, and I anticipate somebody asking me about the right of strikes. So all networks have contingency plans. — and dollars had been shifted from prime over the last several years into sports.