Good afternoon, everyone, and welcome to Sinclair's First Quarter 2024 Earnings Conference Call. Please note, this conference is being recorded. I will now turn the conference over to your host, Chris King, VP of Investor Relations. Chris, you may begin.

Thank you. Good afternoon, everyone, and thank you for joining Sinclair's First Quarter 2024 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 the 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. 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 first 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 today will be a discussion of non-GAAP financial measures, specifically adjusted EBITDA. This measure is not formulated in accordance with GAAP and is not meant to replace GAAP measurements and may differ from other companies' uses or formulations. Further discussions and reconciliations of the company's non-GAAP financial measures to comparable GAAP financial measures can be found on our website. Finally, we note that the presentation of certain information in our first quarter investor presentation may have changed from prior quarterly investor presentations. We also expect that the presentation of certain information in our second quarter earnings release conference call and investor presentation will differ from our first quarter presentation due to an ongoing routine comment process with the Securities and Exchange Commission that we believe other publicly traded broadcasters are currently engaged in as well. Let me now turn the call over to Chris Ripley.

Good afternoon, everyone, and thank you for joining us. I'll start on Slide 4 by introducing an overview of our first quarter financial results. As you can see, Sinclair delivered strong, solid first quarter results that met our guidance expectations in our Local Media segment, while Tennis Channel exceeded expectations for adjusted EBITDA. Within Local Media, our distribution revenue came in slightly above the top end of our guidance range, while advertising revenue was slightly below the low end of our range. As a result, we were comfortably within the consolidated guidance ranges for total revenues and adjusted EBITDA. Turning to Slide 5. I wanted to highlight our strong commitment to our stakeholders through our return of cash. Since the beginning of 2024, we have paid approximately $16 million to shareholders through our regular quarterly dividend, which has a dividend yield of 7% as of March 31. While also purchasing $27 million of debt in January for approximately $25 million in cash. Since the beginning of 2023, we bought back approximately $91 million in face value of our debt and retired another $35 million through amortization-related payments. In early 2023, we also repurchased nearly 9 million shares of our Class A common stock in addition to the $81 million in dividend payments to our shareholders since the beginning of 2023. Our commitment to maximizing value for all of our stakeholders remains a top priority for the company. Turning to Slide 6. We remain committed to the transformation of our traditional local media business. We believe Sinclair as well as the broader industry has multiple growth drivers. First, excluding the impact of the 2020 Georgia runoff, we expect to see record-breaking political advertising revenues in 2024, which equates to more than $350 million. We continue to see strong political advertising demand, and we expect the strong growth of issue-oriented political advertising and what appears to be several close Senate and House races in our footprint to accelerate this growth significantly as we get closer to this year's general election. Given the lack of hypercompetitive primaries, we do expect political advertising spend to be more heavily weighted to the third and fourth quarters as we anticipate most of the spend at the presidential level will be focused on general election. Rob will cover this in more detail shortly. Second, our focus on high demand and differentiated local news and sports content continues to drive strong and loyal viewership with over 44% of viewer impressions across our station portfolio driven by non-network content. In addition, with nearly all of our big four traditional subscribers renewing throughout 2024, we expect a mid-single-digit net retrans 2-year CAGR from 2023 to 2025. We have already renewed 42% of our big four traditional network subscribers as of the beginning of May, with the remaining renewals coming up throughout the remainder of the year. NextGen Broadcasting is becoming a reality as well. We now have 3.0 coverage in over half of our 86 markets and over 75% of the U.S. In addition, at the NAB conference last month in Las Vegas, we launched Broadspan wireless, our NextGen datacasting platform with our first go-to-market datacasting market partner, Edgio. Turning to Slide 7. For years, the broadcast industry, often led by Sinclair, has spoken about NextGen broadcast opportunities that will represent a sea change for the traditional broadcast industry. I'm very pleased to announce that the time for the NextGen data distribution opportunity is now. Broadcast data distribution has many benefits, such as a more efficient distribution of mass consumption data, improved customer experience with lower latency and higher quality, and lower cost for data delivery. Broadspan will use the industry's 3.0 spectrum for data distribution to deliver a suite of data solutions to the market. The platform centralizes data distribution management across multiple stations and markets, allocates spectrum assets without disruption to the existing broadcast services, and collects insights on executed data deliveries. Another business use case focuses on automotive connectivity services, which would allow the distribution of data to vehicles, including over-the-air software updates, live broadcasts and alerts, high-fidelity audio, and other features. In addition, working in partnership with Edgio, we have launched a new content distribution service using streaming video offload, allowing a customer to seamlessly switch between over-the-air and over-the-top sources to offload bandwidth-intensive traffic from traditional broadband networks. Broadspan will also be able to deliver precise navigation, which can achieve up to 3 centimeters GPS accuracy by augmenting GPS data with real-time kinematic positioning error correction feeds. In addition, the broadcast positioning system or BPS is not satellite-based, which can offer crucial redundancies should anything happen to the existing GPS infrastructure that almost every industry relies on heavily today. We could not be more excited regarding the near-term and long-term business opportunities for NextGen broadcast and Broadspan, and we're focused on remaining an industry leader in this exciting new technology. Turning to Slide 8. Last week, we paid the remaining $445 million to Diamond Sports Group per the settlement with Diamond that we previously announced in January. STG contributed $347 million to the gross settlement figure, while Ventures contributed an additional $98 million in addition to the $50 million Ventures paid in March. These allocations were made following discussions between the two independent boards of directors of STG and Ventures after considering several different financial metrics, including revenue, assets, income, EBITDA, and free cash flow for the two units, among other considerations. Notably, our net settlement cost estimate remains $250 million to $325 million, which reflects income tax benefits, the increase in the NSA fees, and other considerations. Of the net cost estimate, we expect STG's portion of the total to be approximately 55% to 60%. Now let me turn it over to Rob to discuss our local media strategy.

Thanks, Chris. Turning to Slide 9. I wanted to begin by touching on the broad advertising environment, which came in slightly below our expectations for core advertising in the first quarter. Pro forma core advertising was down 2.1% on a reported consolidated basis. However, the quarter was impacted by less premium sports exposure compared to the year-ago period due to the Super Bowl being broadcast on CBS this year versus FOX last year, as well as the Final Four being based on cable this year in addition to a $6 million decline in the sports betting category. Absent those revenue streams in both years, core revenue would have been up low single digits year-over-year. We do expect core advertising revenue growth to increase year-over-year in the second quarter with growth expected in the 2% to 6% range over last year's second quarter. Now on to categories. Services continue to be a top performer, up year-over-year in the quarter, driven by home repair and homebuilding categories. Legal and pharmaceutical categories also showed nice growth year-over-year. However, as noted earlier, sports betting fell materially year-over-year. Automotive and medical were the largest drivers of our slight miss versus our guidance for core advertising revenues. Auto continues to see modest pressure as manufacturers and dealers see fewer sales, primarily due to the higher interest rates. As we begin the second quarter, retail, services, and entertainment pacings are strong, while medical and pharmaceutical pacings are slightly softer than April of last year. Also of note, sports betting, which was down almost 60% year-over-year in the first quarter, is pacing up almost 30% in the second quarter. On Slide 10, I wanted to provide a quick update on political ad spending as the political season is well underway and expected to be a record year. We booked $24 million in political advertising in the first quarter of 2024 within our guidance range. With strong fundraising trends, we continue to anticipate political revenues to be back-end loaded this year based on both independent third-party research and our internal data. Notably, as of May 1, we have pre-booked over $77 million in political advertising for the second half of the year through election day. This compares to $21 million as of the same date in 2020 and $28 million in 2022. Our proprietary pricing tool will help us to price properly versus demand throughout the political season to maximize revenue. Looking at the individual races, 23 of the 34 U.S. Senate races this fall will be in Sinclair market. We forecast 10 of those states will have competitive races as opposed to 8 in 2020. We have 7 states in our footprint with governor races, and we believe we have 24 competitive house races in our footprint this fall as opposed to 18 in 2020. This is in addition to the 10 key states for the presidency within our footprint. We continue to see strong activity from PAC and Super PAC fundraising, and heavy spending is forecasted to continue for issue-based advertisements. These developments lead us to continue to expect political advertising revenues above $350 million in 2024. Now turning to Slide 11. We have reached retrans agreements with 42% of our traditional Big 4 subscribers for a new multiyear distribution agreement so far this year. Nearly all of the remaining traditional Big 4 network subscribers are on agreements that expire between now and the end of 2024. We also have only one Big-4 network affiliation that expires before the back half of 2026, providing us with high visibility in our network compensation expenses over the 2024 through 2026 time frame. With these negotiation schedules in mind, we continue to expect a mid-single-digit 2-year CAGR for net retrans from 2023 to 2025. Another positive data point during the quarter comes from our over-the-air broadcast networks Charge!, Comet, and TBD, which we refer to as The Stack. The Stacks are at a new high in quarter with primetime viewing up 38% year-over-year, reaching 73,000 viewers and covering the 25 to 54 age group. In fact, the three networks combined set 62 all-time high ratings records during the first quarter. Turning to Slide 12. Our news gathering operation continues to excel while highlighting the importance of broadcast news to local communities. As demonstrated by our coverage of the March 26 collapse that occurred at the Francis Scott Key here in Baltimore. Our Baltimore, Washington, D.C. station dominated the coverage locally, with our Baltimore station, WBFF, providing live coverage of the collapse a full 30 minutes before any other station in the market was live. Within 48 hours of the tragedy, our two stations combined for 1.6 million page views on their website, over 2 million YouTube views, more than 9 million social impressions, and 300,000 engagements, illustrating our focus on connecting with our viewers wherever they may be and however they want to view our content. As seen on Slide 13, we are also continuing to build and develop our audio and social division and involve the art of reporting and storytelling to engage with fans of sports, entertainment, news, and true crime. We have recently signed three-time National Champion College Football coach Urban Meyer and commentator Rob Stone to host a new sports podcast focused on college football on and off season, which will launch this fall. Our team is also in active negotiations with multiple top-tier athletes and entertainers as we continue to build out our roster of podcast and audio talent. Look for an announcement in the coming weeks, which will detail all we have planned to roll out later this year.

Now let me turn the call back over to Chris to provide an update on Tennis Channel as well as our broader ventures segment. As seen on Slide 14, Tennis Channel recorded another strong quarter with $63 million in total revenue, which was at the high end of our guidance, and $26 million in adjusted EBITDA after excluding $1 million in growth initiative net costs, which was comfortably above our guidance. We expect continued strong growth metrics from Tennis Channel as we look forward to our live coverage of Roland Garros later this month. Moving to Slide 15. The average number of households watching Tennis Channel in the first quarter grew by 35% year-over-year, while total viewers grew by 27% and social media impressions grew by 141% year-over-year. Once again, Tennis Channel ratings growth outpaced all other English-language sports networks in the world. The TC+ streaming platform increased monthly subscribers by 7% year-over-year, ending the quarter with its highest monthly subscriber total ever. The T2 FAST channel grew by 273% year-over-year, thanks in large part to expanded distribution, and as its exclusive Tennis content continues to drive strong growth across multiple delivery platforms. In addition, Tennis Channel will launch a direct-to-consumer offering later this year, which will provide a significant new leg of growth. We also believe pickleball coverage and PBTV will drive even stronger growth metrics for Tennis Channel in the coming quarters. Also of note, for the first time, Sinclair is participating in the sports upfront next week in New York. In addition, we will be offering opportunities for advertisers to be aggregated in stadium as well as through sponsorships for all U.S.-based tennis tournaments through Tennis Channel. We remain excited about the many growth opportunities ahead for Tennis Channel. I wanted to provide a brief update on our Ventures portfolio on Slide 16. As of March 31, Ventures held a cash position of $318 million. Of note during the quarter, the company received $49 million in exit distributions and $3 million in capital distributions while making an additional $2 million of capital contributions into the portfolio. As illustrated this quarter, our goal over time is to translate a significant amount of these minority investments into other majority-owned investments that we expect to have long-term growth potential and consolidation opportunities as well as provide greater visibility into the performance of Ventures assets. We will continue to update our investors on a regular basis as we transform this investment portfolio. Before I turn the call over to Lucy to discuss the financial results, I wanted to highlight our awards and charitable endeavors on Slide 17. Sinclair won 28 different broadcast awards during the quarter, including 3 national awards and 2 regional Emmy awards. On Earth Day, we released our second annual corporate social responsibility report, which highlights our environmental and social efforts throughout the company. On the charitable front, we held our second company-wide day of service in April, which saw over 1,300 employees volunteering their time to provide over 3,700 hours of service during that single day. We collected over 1,100 pounds of trash, prepared and served over 3,800 meals, and impacted more than 14,000 baby products and more than 8,500 boxes of food. I want to take this opportunity to thank our employees for another successful day of service. In addition, I'm proud to announce that Sinclair donated $50,000 to the Maryland Tough Baltimore Strong Key Bridge Fund, which will go towards helping our fellow Marylanders that have experienced economic hardship following the collapse of the Key Bridge here in Baltimore. Our Sinclair Cares also completed a partnership with Reading Is Fundamental, which was a month-long campaign during National Reading Month in March.

Thank you, Chris, and good afternoon, everyone. Beginning on Slide 18. On a consolidated basis, we delivered media revenues during the first quarter that met our guidance range as distribution revenues exceeded our guidance. Political revenues came in near the upper end of our guidance range, and core advertising was slightly below guidance due to the reasons Rob mentioned earlier. As compared to last year, consolidated media revenues increased to $792 million during the quarter, primarily due to the higher political revenues and an increase in distribution revenue. On Slide 19, consolidated adjusted EBITDA was also within our guidance range with media expenses favorable to guidance as a result of sales promotion and G&A expenses coming in better than anticipated and corporate overhead higher due to primarily stock-based compensation and group insurance. As compared to last year, on a pro forma basis, consolidated adjusted EBITDA in the quarter increased by 10%, driven by the increase in higher media revenues and lower corporate overhead. Media expenses were up year-over-year, largely driven by annual compensation increases and network programming fees. Slide 20 walks through our balance sheet metrics with the next meaningful maturity more than 2 years away. Sinclair Television Group's first lien net leverage was 4.3x and total net leverage 5.3x at the end of the quarter on a trailing eight-quarter basis. Interest coverage was 2.9x as of March 31. As previously announced, we repurchased $27 million in face value of debt for approximately $25 million in cash in January. Our consolidated cash position was $655 million at quarter end with $337 million at SBG and $318 million at Ventures. Including our undrawn revolving commitments, total liquidity was more than $1.3 billion. There were 66 million total shares outstanding at quarter end. Slide 21 introduces our second quarter guidance, which calls for total media revenues in the $813 million to $832 million range, up 7% to 9% year-over-year in the quarter. The growth is driven primarily by political, which we expect to be in the $29 million to $35 million range, as well as a 4% increase in distribution revenues. Core advertising, as Rob mentioned, is expected to grow 2% to 6%, given continued strength in the services, retail, and entertainment categories. We expect adjusted EBITDA in the quarter to be in the range of $132 million to $155 million, up from the pro forma $110 million of adjusted EBITDA in the year-ago period. That's due to higher media revenues being modestly offset by higher production costs, network programming fees, sales costs on the higher revenue, and Tennis Channel growth initiatives.

Turning to Slide 22. We conclude our 2024 full year guidance for certain expenses. The notable changes are an increase to interest expense on fewer Fed rate cuts expected this year, an acceleration of Q2 '25 cash taxes into Q4 of '24, lower CapEx, lower media expenses, and an additional $10 million in Ventures distributions received in the first quarter. With that, I'd like to turn the call back over to Chris for some closing comments. Thank you, Lucy. Turning to our key takeaways on Slide 23. Sinclair delivered solid first quarter results, meeting guidance expectations in our Local Media segment and exceeding adjusted EBITDA expectations at Tennis Channel. Core advertising trends remain solid in most categories with our effective yield management and sales training processes driving industry-leading core growth over the past several quarters. We anticipate second quarter year-over-year growth of between 2% and 6% in core advertising. We have significant retransmission agreements renewing this year, of which we've already renewed 42% of the traditional Big 4 subscribers. With only one network affiliation agreement remaining to be renewed, we have good rate visibility into the next couple of years, leading us to forecast a mid-single-digit 2-year CAGR in net retransmission from 2023 to 2025. We announced the launch of Broadspan, our NextGen data solutions brand that will deliver a unified suite of products to the marketplace, and we also announced our first NextGen corporate partner, Edgio. In summary, Sinclair is in a strong position for both the short and long term. Our strategic focus aligns with the anticipation of record-breaking political election year, contributing to robust growth in adjusted EBITDA throughout 2024. We could not be more excited about the future in front of Sinclair. Lucy, Rob, and I will now open the call to questions. Thank you for joining us today.

Your first question is coming from Dan Kurnos of The Benchmark Group.

Can you guys just dig a little bit deeper into the core guide for Q2? It's really healthy. You guys gave a little bit of color on it. It sounds like there's a little bit of uniqueness there like sports betting that Rob called out. But beyond that, it sounds like things are getting slightly better. So maybe you could talk through kind of what you're seeing on the core environment in Q2 especially as we head into the back half of this year.

Sure, Dan. This is Rob. Even though auto is trending negative, it's a very small, low single digit, so it's starting to return to somewhat normal. They're going to have to get rid of the '24 coming up. We expect some rebates. There's been some softness in the first part of the year due to interest rates. But with our automotive specialists, we've been able to offset some of that weakness in that category. Our services remain strong. We have a big home purchase predictor out in the marketplace that has delivered key results for us to help drive our service category. And we believe that with our proprietary pricing system, we're maximizing the demand that is in the market with rates.

Also, I'll just add to that, Dan. I think for reasons that Rob pointed out in his prepared remarks, Q1 had some negative impacts from the lack of certain sports and sports betting coming off high comps from the prior year. But what we see in Q2 is really pretty consistent with what we have been performing at in terms of core growth in 2023 quarter after quarter. So we've been consistently posting numbers that are industry-leading. Obviously, Q1 was a little different for the reasons we described, but we're back on trend for Q2.

Do you have a view on how the year kind of plays out, not necessarily a specific number, but given some crowd-out potential and the fact that you guys are already calling for record political. And I don't know if you're factoring in the Maryland craziness that's already going on that's not considered a competitive race.

Yes. We factored that in. That's why we've gone to the algorithm approach to pricing our inventory in those markets where we've seen significant prebooks of those dollars. We've adjusted the rates based on that demand. So in prior years, without having a detailed pricing system, it was kind of like a whack-a-mole, but now there's weekly meetings, and we have a yield in pricing and planning team that goes through what's happening with the system on a weekly basis. So we think we're better prepared now than ever to be able to handle that demand.

Yes, I completely agree with everything Rob mentioned regarding the record political advertising we anticipate this year. We expect this to lead to some crowd-out in the third and fourth quarter. However, we remain optimistic that the positive trends we've established and our new pricing management systems will continue to perform well throughout the surge in political advertising.

And I don't want to understate the signing of Urban Meyer as our first top sports podcast personality. It will be in-season and off-season, and Urban already has a series of top-notch people lined up to come on to the podcast. So that is definitely a growth area for us as well.

Can I speak one more in, Chris, just on NextGen. I mean, you're saying it's here. We've heard it for a while. Obviously, you guys have been out front on this one. Is there any way to quantify the impact to the P&L from this? Are we talking like handfuls of millions next year? How should we start to think about the actual benefit from the initiatives that you guys are launching and you have a very unique opportunity set both here and abroad. So love some color.

Sure. As I said, the time to actually make this opportunity real is now. And we're, one of the first products that is going to be CDN offload with our partner, Edgio. I'm sure other CDN operators will be interested in that, too. Automotive is hot on its heels, enhanced GPS. And some of those things are going to be coming live at the end of this year. I think dollars will start to come in when those offerings become live. I think this is going to be a situation where it's sort of an exponential growth curve, if you will. If you think about an S-shape adoption curve and typical new technologies, I'd expect it to start off somewhat slow, but then pick up significant pace as we get more adoption. So for 2025 what you're asking about, yes, it's probably not a very material amount of revenue. But as we get more penetration into these end markets, we'd expect that to pick up pace significantly.

Now coming from Aaron Watts of Deutsche Bank.

I had two questions. The first one, another one around core advertising. We've heard from several ad-driven media companies that while local has been fairly steady and healthy, it seems as though that a sustained national ad recovery is proving elusive. Curious if that's the same experience you're having, but also how you think about the drivers of that continued national softness. Does it go beyond simply macro rate concerns, et cetera, causing large brands to hold back spending? Or is this maybe some early signs of all the ad inventory coming online from recently introduced streaming advertising tiers perhaps signing off share that used to flow into the traditional TV marketplace. And if that's not happening yet, is that an impact you're expecting to see?

So I'll take that. So we started off the year naturally slow, but it has rebounded. It is facing positive for us in the second quarter. In addition, we struck a very unique deal to be able to be the exclusive seller of Netflix in our local markets as well. So any impact where streaming might take place, taking some of the ad dollars, we've positioned ourselves to have premium streaming inventory to sell with our global sellers. So I think it fortifies us both locally and nationally.

That's helpful. And then secondly, around capital allocation, does the focus continue to land on debt reduction going forward? And relatedly, have you bought back any debt since the end of the first quarter? And as we think about you moving towards your leverage target of high 3x, low 4x area, there will be clearly healthy cash inflows this year from political. But as you move into next year, that obviously cycles off. Are there ways you can help us think about perhaps inorganic ways to help accelerate your journey towards your target?

Yes. So look, we're still focused on a few different priorities within broadcast. There's a decent amount of transformation spending going on around cloud and unified ad sales, and there'll be significant savings coming out of those transformation efforts, which should bear fruit over the next year or so. And on Ventures, as I've stated before, we're looking for new opportunities. But in terms of the capital structure, we will continue to be opportunistic depending on where debt and equity markets trade. Our emphasis right now is for SBG on the deleveraging side. And certainly, debt buybacks are something that are going to be high on our list for that excess cash flow that is being produced. And as we've always stated, we have no sacred cows. We want to unlock some of the parts of the valuation that we think we're grossly undervalued for. And to the extent that asset sales make sense in order to unlock that value and help us delever, then that's something that we'd be open to as well.

Your next question is coming from Steven Cahall of Wells Fargo.

First, Christian, Lucy, just on the Q2 retrans guide, it's about $384 million. I think that's flat with what you had in Q1. So you've done a lot of renewals year-to-date. I was wondering if you could just update us on what you're seeing in those renewals, is pricing coming in the way you would expect? I think we thought that you might see a little bit of acceleration quarter-to-quarter in retrans. So I would love it if you could unpack those trends a bit. And then on Tennis Channel, really strong EBITDA in Q1. The guide is much lower in Q2. Just trying to understand, is that timing of programming? Investment in DTC, anything else? And then just lastly, kind of following up on Aaron's question. As you think about refinancing that you've got ahead, you've got a lot of assets at Ventures. You've always been very, I think, particular in how you've structured the company in terms of what's at SBG and Ventures. So as kind of creditors move into the refinancing and see the leverage at SBG. Do you see those assets as fungible? Or do you really think that the silos are going to be kind of going their separate ways increasingly as you get into the refinancings?

Thanks, Steve. So first on retrans, all of the deals we've completed so far have met or exceeded our expectations. The perception of acceleration you're noticing may simply be a timing issue regarding when the MVPDs are coming up, as we will observe that acceleration this year. This aligns with our guidance of mid-single-digit growth for '24 and '25. So I believe what you're seeing is just a timing issue regarding when the majority of those deals are finalized. And then, Steve, what was your second question again?

Just on Tennis Channel. It's kind of different quarter-to-quarter. Just trying to understand as to why.

I'll let Lucy chime in on this. But Tennis Channel is seasonally the lowest in Q2 mainly because of Roland Garros. So the French Open, it's our biggest event. There's a lot of production spend in that quarter. And I don't know if Lucy, do you want to add anything to that.

Yes, I would just add, Steve, that there's also timing of rights payments around Tennis as well as they have upcoming their direct-to-consumer launch later this year. So there is some initiative spending around that that happens in Q2 as well.

Right. And then in terms of your last question, look, our expectation now is that both Ventures and SBG are self-funded. And we don't see a need for assets to be moved from one or the other. And obviously, to the extent that circumstances were to change, then that's something we could do, but we don't foresee that being needed.

Your next question is coming from Barton Crockett of Rosenblatt.

I wanted to just drill down on a couple of the key numbers that you guys talked about. So in terms of subscriber churn in the industry, could you give us a sense of what you're seeing now? I know Fox, I think spoke earlier about minus 8%, but different people have different takes. So I'm just wondering what you're seeing, if you could update us on that. And then in terms of the ad market. You touched on this a little bit, but I'm just curious, just in broad kind of feeling that we're in an environment where we have interest rates that are kind of higher for longer than I think people were hoping even a couple of months ago. It sounds like that might have impacted your advertising a bit, but maybe that impact is fading now. Just what are you feeling from that kind of macro backdrop, if anything, in your ad business?

So Barton, I'll address the first question. We are still experiencing mid-single-digit percentage churn across our subscriber base. Traditional subscribers are declining, while virtual subscribers have shown growth with an average mid-single-digit churn rate.

From the advertising side, we continue to watch the interest rates and how it's impacting the economy through the second quarter. We're halfway through it. We'll see how it's playing out. The business has become a month-to-month business. But we have the Olympics coming up in the third quarter that will stimulate our NBC stations. Political will be hitting about that time as well. And then we get into NFL and college football. We're robust on the side that the prime college football is coming up this season along with Prime NFL. So starting Friday night through all the way through Sunday night, ABC hasn't announced, but the indications are that 10 Monday night football games will air on ABC as well as the simulcast. It carries us through the year and through political, is how I look at it.

And just to add on to that, Rob had mentioned that business, auto, which is particularly interest rate sensitive was down a little bit or is down a little bit. But what we've been able to do is fill in with other categories and other areas and continue to have that overall core growth that we've been reporting, even if there is some weakness showing up because of interest rates.

And I'll remind everybody, several years ago, we brought in specialists from key categories that had a background in those categories to train the rest of our sales group to make knowledgeable, to not have that reliance on automotive. So we've been well prepared to approach the marketplace as full consultants rather than just selling spots and dots.

And then just one other kind of check-the-box question. Is there any exposure that you guys would have now or none if the bankruptcy emergence doesn't develop as everyone hopes, given the Comcast outage there? I think there's more questions about that than there might have been. But you guys are not exposed to that, correct? It doesn't matter for your settlement or anything at this point?

No, Barton. Now that we've paid the settlement, there should be no impact on whatever happens to Diamond in the future.

Your next question is coming from David Hamburger of Morgan Stanley.

Could you help us with the timing of the income tax benefit, the MSA fee increase, and various other considerations with regard to the Diamond Sport settlement?

On the tax side, it depends on when Diamond actually exits, but that will either impact the end of 2024 or into 2025. The next largest category is MSA fees, and we are already collecting those at the higher rate. We are guaranteed to have at least six months of those payments, which could extend longer. However, the timing of Diamond's emergence could influence how long they choose to utilize our management services. Nevertheless, they are committed for at least six months, possibly longer, and this situation is time-dependent, specifically in 2024.

That's helpful. So after the settlement, it appears that most of the cash at the television group has been used up. They will generate more free cash flow this quarter, and there's about $220 million remaining at Ventures. Can you clarify the minimum cash balance you would like to maintain, the potential uses of the cash, and how you plan to allocate the over $200 million at Ventures? How do you plan to manage cash between the two different areas?

There is significant liquidity at SBG, and STG has positive cash on the balance sheet. This cash is expected to grow considerably throughout the rest of the year, with a fully undrawn revolving credit facility of over $600 million. Therefore, the minimum cash required for this business is comparatively low. Lucy may want to provide a specific figure on that. The cash flowing in will be above what we currently have on the balance sheet, which gives us flexibility for shareholder returns or debt buybacks, the latter being a probable priority moving forward. We are focused on transformation and investments in areas that should yield returns in the years ahead. In terms of Ventures, we have been equity monetizing our minority investments, having generated about $50 million in Q1, and we will keep that momentum. We expect cash to keep accumulating in Ventures, but we are not in a hurry to redeploy it. Our focus is on finding new majority-controlled investments in fragmented industries that show favorable long-term growth trends, and we will approach that market with discipline.

I have a housekeeping question. It seems Lucy mentioned that your interest expense guidance previously included more Fed cuts than expected. What are you currently estimating for the increased interest?

So David, we always model based on the forward curve. When we reported back in February, the forward curve had estimated that the Fed was probably indicating around six cuts for the year. Now, I think they're down to about two. Whatever the forward curve is, we use in our model.

And your next question is coming from Benjamin Soff of Deutsche Bank.

Just a follow-up on the minority investments. I appreciate the commentary that you guys are looking to switch from the minority investments to the majority investments. When I look at your guidance that implies that there's not much distributions left for the rest of the year. And I'm just kind of wondering why that would be? And then a housekeeping question. Could you remind us what the value is of the Valley stake and then the other pieces of the investment portfolio? I think there was some real estate and some private equity in there.

So we don't forecast any monetizations or distributions explicitly. So that's why you're not seeing that in any of our projections. So that's not to say that we don't think there will be. In fact, they most certainly will be. But since it's not something that comes out of a regular operating business, it's harder to project naturally; it's sort of lumpy. So we do not project that explicitly, but we do expect there to be further monetizations as the year continues. Sorry, what was your next question?

Just if you could share the value of the different items in the portfolio.

So the Valley stake is currently valued at approximately $155 million. When you sum up the rest of the minority assets, that is around $600 million of NAV. Lucy?

Ben, let me just also clarify because I know historically, we've given that number, including cash. So the number that Chris is quoting is excluding the cash that is sitting at Ventures.

Yes, that's excluding the cash. The Valley stake, you've got the investments, and then you've got cash. They all tally up to around $1.1 billion.

And then I guess just as a quick follow-up, would you expect the amount of distributions you get going forward to accelerate as you undergo this transition?

I mean, look, it's lumpy, as I said. That's one of the reasons we don't put it in our models and project it, but we're actively working on several opportunities to monetize that group of assets set at $600 million. I would expect that we do have some level of monetization continuing through this year.

Thank you very much. That appears to be the end of our question-and-answer session. I will now hand back over to Chris for any closing comments.

Thank you, operator, and thank you all for joining us today. To the extent you have any further questions or comments, please do not hesitate to reach out to us.

Thank you very much. This does conclude today's conference call. You may disconnect your phone lines at this time, and have a wonderful day. Thank you for your participation.