Operator: Our next question comes from Craig Huber with Huber Research Partners.
Craig Huber: Can you just go a little more in depth about the small acquisition you did next to Premion? What it brings to you guys, the technology, et cetera? And just what it means for your revenues in that segment, please? And I have a follow-up.
Tom Cox: Sure, Craig. This is Tom Cox, good to be with you all this morning. So super excited about what Octillion brings to us moving forward on the Premion side. A couple of things I’d mention off the top. So owning our technology allows us to exercise more operational control on the delivery of campaigns. So that’s a distinct advantage. Second, it enables us to drive greater innovation and product throughput. We’re not relying on third parties to build the next generation of product that we need and our advertisers are looking for. And third, it allows us to improve our overall EBITDA margins because you’re not paying the expense associated with those third-party vendors. I would also say, to your question around revenue growth, Octillion is a small but powerful company.
And we expect that we’ll be integrating Octillion through much of this year. But once the company is integrated into Premion, you have a unique marriage of a great sales platform, leveraging our rich broadcasting history and our hometown advantage in many of our markets, with a cutting-edge technology, and we’re very bullish on what that can do both for revenue growth as well as EBITDA growth beyond the remainder of this year and into next.
Craig Huber: And then Julie or Dave, whoever wants to answer this. Premion, again, just go to a little more depth here about your outlook for revenue growth this year and how you think it will sort of phase in over the course of the year? It sounds like you think it will — the trends will improve as the year goes on, but I don’t want to put words in your mouth.
Tom Cox: Correct. Correct, Craig, this is Tom again. We expect the trajectory on Premion revenue will improve throughout the year. A couple of things I would mention. First, we have fully cycled against that national account. As Julie alluded, there is the same sort of dynamics from a national and local perspective that we’re seeing on the linear side in the Premion business, which isn’t surprising because, remember, what Premion is really designed to do is take advantage of the converged linear plus streaming [indiscernible] system that we’re working in. So many of the customers that Premion have or has today overlap only with the techno linear portfolio. We do expect revenue improvement throughout the year. And obviously, the faster we can get Octillion integrated into Premion, the more that revenue trajectory can improve as we bring more innovative products to market.
Craig Huber: And if I could just squeeze in 1 more, if that’s okay. Advertising, Dave, just [indiscernible], for the whole company in the first quarter, just go through a little bit further what your outlook is there for the first quarter? What’s the Super Bowl benefit you guys on a year-over-year basis? The underlying plans there. Is auto getting worse or better versus what you saw in the fourth quarter, for example, or after the election in the fourth quarter?
Julie Heskett: Yes, absolutely. So first quarter, automotive continues to be strong. The underlying trends there continues to be strong, not as strong as we saw in the back half of 2023, but still…
David Lougee: Cycling against better comps, yes?
Julie Heskett: Yes, but still up mid-single digits. We also have other categories that continue to remain strong, such as services, which we talk about every single quarter, specifically home services, but also legal services. Health care is also trending favorably in Q1. And our digital revenues are projected to be up in Q1 as well. And Super Bowl is approximately 1 percentage point of our total revenues in Q1 where we’ve sized that in the past, it’s approximately $10 million of incremental revenue.
David Lougee: But I would say — I’ll just add to that, Craig. I think I’d add before is our underlying trends are pretty good. We’ve got noise in the system on the national, local side that we talked about a little bit, and with Premion, but — and we obviously had — we had an outage for 45 days with a major distributor that doesn’t help. But the underlying trends appear to be pretty favorable on advertising, really large for us.
Craig Huber: Okay. Just to be clear, my last thing here. The Super Bowl, you think it’s $10 million incremental in the first quarter versus it being on Fox last year? Is that what you’re saying?
David Lougee: That’s a good guide.
Operator: Our next question comes from James Goss with Barrington Research.
James Goss: Okay. A couple of other points of clarification with Octillion. It mentions connected TV. And is this somewhat of an installation from subscriber churn to this faster-growing area right now? And also, does this extend to the partnership [indiscernible] as affiliated with you in Premion, so it would relate to any of their involvement in that sector as well? Is this a part of Octillion or separately?
Tom Cox: Correct, James. So this is Tom again. A couple of thoughts. So yes, it’s very core. The Premion business is designed to take advantage of the migration of advertising dollars from linear to streaming. Where we are uniquely positioned in that change or that shift is that we leverage our strong network of local stations. So as I’ve shared with you all in the past, between the Gray stations, the TEGNA stations as well as Premion’s direct sales force, we have what we sort of characterized as feet on the street and markets reaching about 80% of U.S. households across the country. And that is a formidable and very powerful sales force. And really bringing Octillion’s technology in just allows us to deliver better and more innovative product to that sales force.
And yes, to your second question, Gray, as a strategic partner, investor in Premion will also be able to take advantage of the Octillion platform. And super excited to bring to Gray all the benefits that TEGNA will also benefit from.
