E.W. SCRIPPS Co (SSP) Q2 2022 Earnings Call Transcript

Ladies and gentlemen, thank you for standing by, and welcome to the Scripps second quarter earnings call. For the conference, all participants' lines are in a listen-only mode; however, there will be an opportunity for your questions. If you’d like to ask a question at any point during the call, please press one then zero. If you should require any assistance, please press star, zero and an operator will assist you offline. As a reminder, today’s call is being recorded. I’ll turn the call now over to Ms. Carolyn Micheli. Please go ahead.

Thanks, John. 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. Actual results may differ. 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 valuation 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 Scripps President and CEO, Adam Symson; Chief Financial Officer, Jason Combs; Local Media President, Brian Lawlor, and Scripps Networks President, Lisa Knutson. Also on this call is controller, Dan Perschke. Here is Adam.

Good morning everybody. Thanks for joining us. We are very pleased to be delivering second quarter financial results that almost fully meet, and in some cases exceed expectations we set back in May despite the ongoing economic uncertainty, demonstrating once again that the company we’ve been transforming is resilient in its performance even in the face of macroeconomic challenges. In our local media division, Q2 political advertising reached a record level on a same station basis, foreshadowing our expectations for the full year political cycle. We are now moving into the heart of the political spending season when we expect to meet or exceed our 2020 presidential year level. With well over $8 billion in the nationwide political spending arena this season, it should be clear that political revenue defies economic trends. Both Scripps’ political and retransmission revenue offset a bit of cyclical softness in core advertising. Driven largely politically, we expect local media to deliver impressive second half results for total revenue and profitability. Our networks group fell a bit short of our revenue expectations due to the national ad market climate, and yet we were pleased to see the division achieve the same level it reached in Q2 of last year and performed better, not just than other national networks groups but also better than the ad revenue performance of some major digital and CTV companies. The profit margin for the Scripps networks division also reflects the fundamental productivity and durability of that business. Our Q2 performance illustrates that we have positioned the company well to move through this period because of the work we have done in recent years to strengthen our local media portfolio and improve its financial performance and to create the new high margin networks operating unit. Both divisions are already capitalizing on growth in various TV viewing platforms, and once we move past this economic cycle, we expect a rebound in key local core ad categories and a return to networks division margins in the 35% to 40% range. Like every other company, we’ll navigate through the macroeconomic environment and in the near term, we’ll benefit from what we expect will be really robust political revenue this year. However, we also see clearly how this same environment of economic uncertainty will in fact play to our advantage. We’d all be smart to remember that the majority of Americans still turn to pay TV for their entertainment and we expect we’ll continue to benefit from growth in retrans revenue near and long term. Our company employs an all-of-the-above approach to reaching audiences, including a unique focus on free over-the-air television. In this inflationary environment when consumers are already struggling with subscription fatigue, we are targeting cord cutters and cord nevers with the benefits they would gain by adding on the free premium programming available from over-the-air television, the best live sports, network programming, and local and national journalism informing and entertaining them for free alongside their increasingly expensive subscription bundles. The cost of subscribing to streaming services is going up along with everything else. MoffettNathanson recently reported that the price of most major streaming subscriptions has nearly doubled in the last four years. According to a May study by Recurly, TV households have an average of five subscriptions, but 31% of respondents also said they planned to cancel some this year. We think Wall Street is already acknowledging this trend. Maybe what investors haven’t caught onto yet is how consumers are watching instead. A recent study by Parks Associates found that 31% of people who don’t have cable use their digital TV antenna for free over-the-air viewing, a population we expect to grow even faster during a period of inflation and negative consumer sentiment. As we have previously discussed, Scripps is capitalizing on this free TV movement with a consumer marketing campaign touting the benefits of over-the-air television. Last month, we rolled out paid traditional and digital campaigns in 13 test markets promoting our educational website, TheFreeTVProject.org, and explaining the quantity and quality of options available for free. We remind consumers that they can get live sports, local news, and big four network programming and our premium networks without having to subscribe to half a dozen subscription streaming services, and we’re working with retailers and installers to make it easy. Pocketbook concerns and rising subscription prices also are benefiting Scripps’ free ad-supported connected TV products. All of our local station brands and most of our national networks are now available across a wide range of CTV platforms and, as you can tell from the revenue growth we’ve shared, gaining traction with audiences. Because we believe consumers will continue to demand a variety of TV viewing options, we see the increasing cost and complexity of streaming platforms as an opportunity to win audiences over to over-the-air television and the shift from traditional platforms as an opportunity to advance our brands on CTV. That’s the all-of-the-above approach I mentioned earlier, and it’s designed not just to serve audiences but also to meet the needs of the nation’s advertisers. While we are clearly big believers in the opportunity in connected TV, we are exceptionally well positioned to benefit from the ongoing attraction advertisers have to the still very dominant and incumbent media marketplace, linear television. Linear TV has maintained its durability because consumer products companies - retail, big pharma, insurance, and other big advertising spenders, continue to gravitate to the consistent, brand safe and premium programming that delivers their messages effectively and efficiently to the largest audiences. A more than 70-year track record leads CMOs to recognize that there is nothing experimental about their spending in television. Two years ago as the pandemic was shutting down the nation, Scripps was quietly making plans that led to the creation of a new free cash flow engine, our highly profitable Scripps networks business. At the same time, we have continued to steadily grow our legacy local television revenue through core advertising, political advertising, and distribution fees. I hope it’s clear that, as we did when the pandemic shut down the nation, Scripps will use this blip in the economy to our advantage, and we will again emerge stronger than before. Now here’s Jason.

Thanks Adam and good morning. Before I begin reviewing our second quarter results, I want to highlight that all figures for the quarter are reported as is. We have now passed the anniversary of our acquisition of Ion and the establishment of the Scripps networks, which occurred in early January 2021, so we do not have any adjusted combined results for Q2. Any full year or year-to-date results will still reflect comparisons on an adjusted combined basis. Let’s start with the results from the local media division. Local media revenue increased nearly 10%, driven by political advertising and retransmission revenue. Core advertising revenue fell by 2%, although we saw strength in services, home improvement, and travel and leisure. Political advertising revenue for the quarter was $24 million, compared to $13 million in Q2 of 2020 and $22 million in Q2 of 2018. Retransmission revenue rose nearly 10% to $171 million. Local media expenses were up less than 6% from the same quarter last year; excluding programming costs, expenses increased less than 4%. Local media segment profit was $81 million. Moving to the Scripps networks division, revenue for the second quarter of 2022 was $239 million, matching the same quarter last year despite challenges in the national advertising marketplace. Networks segment expenses increased by 26% compared to Q2 of 2021. Please note that this quarter included first-time costs for producing the Scripps National Spelling Bee and launching Newsy, Defy TV, and TrueReal over the air. These strategic investments were made as part of our commitment to growing our national networks. In the third quarter, we will start to cycle through these investments. The segment profit for the networks was $73 million. In the category labeled other, we noted a loss of $4 million, which accounted for our national marketing campaign to promote consumer digital TV antenna use. Shared services and corporate expenses came in $3 million under our guidance at $18 million, as we reduced expenses during the quarter due to economic conditions. The company achieved a Q2 income from operations of $0.32 per share. As of June 30, cash and cash equivalents reached $58 million. Our net debt at the end of the quarter was $3.1 billion, with our net leverage decreasing from 4.7 times to 4.5 times as per our credit agreement calculations. Now I’d like to provide guidance for the third quarter of 2022. We anticipate total local media revenue will rise in the low to mid-20% range compared to the third quarter of 2021, when our core advertising revenue benefited from the Summer Olympics and the late NBA finals. We expect local media political ad revenue to be similar to Q3 of 2020, which was around $90 million. We project retransmission revenue to increase by approximately 10%. We expect Q3 local media expenses to rise in the mid-single-digit percent range. In the Scripps networks division, we anticipate revenue to remain flat. Networks expenses are projected to grow in the mid-teens percent range as we finish cycling against the three network launch costs mentioned earlier. By the fourth quarter, we expect networks expenses to be closer to flat compared to the previous year. Third-quarter shared services costs are anticipated to be around $20 million. Also, regarding our segment cash and other, it includes the expenses for our over-the-air consumer marketing campaign. We expect an operating loss of about $7 million in the other segment in Q3, with around two-thirds of that related to the digital antenna marketing campaign. I will conclude with updated guidance for a few full-year items. We expect cash interest payments to be approximately $150 million based on current estimates for the Federal Reserve's rate hikes for the remainder of the year. We now project cash taxes for the year to be around $80 million, down from our original guidance of $100 million to $110 million. Our expected capital expenditures are now between $45 million and $55 million, a decrease from $70 million to $80 million due to our cost reduction initiatives. We anticipate free cash flow for the full year to be about $400 million, still within the range of our guidance supported by our expense control measures. Additionally, we have slightly adjusted our leverage expectations due to the national ad market situation. We now expect to reduce our leverage to the low to mid-4s by year-end, and we remain committed to reducing debt as our top capital allocation priority. Now here’s Brian to discuss local media.

Thanks Jason. Good morning everybody. Scripps' political advertising results for the first half of the year continue to confirm our expectations that this midterm election will match the 2020 presidential cycle. You’ll recall that early in 2020, Michael Bloomberg was spending heavily in an attempt to establish a viable presidential campaign. Many investors thought it would be impossible to replace that high level of spending, and yet we nearly reached it. In the second quarter specifically, we far surpassed our Q2 2020 levels with our highest Q2 political performance ever on a same-station basis. Nationwide, fundraising continues at a record pace. Recent U.S. Supreme Court rulings have only increased our inbound calls. We expect the ballot issues to be a big driver for our markets in Kansas, Kentucky, and Montana, and in Michigan and Wisconsin, the state legislatures are in a toss-up scenario. In addition, we expect competitive U.S. Senate races in our states of Arizona, Florida, Nevada, Ohio, and Wisconsin, and competitive governors’ races in Arizona, Kansas, Michigan, Nevada, and Wisconsin. We have about 75 competitive U.S. House seats. As we move through the third quarter, we continue to see only positive signs for a heavy political spending cycle. Retransmission revenue was another significant contributor to the 10% revenue growth our division delivered for the second quarter. A recent MVPD contract we signed was a tailwind and subscriber household declines continued to moderate in the quarter, down 1% from the previous quarter and 1.5% from the year-ago period. Strength in virtual MVPD subscribers is driving this improvement. Also during the second quarter, we were pleased to have signed a new multi-year agreement with ABC, our largest network relationship, and with Fox. In the last year, we have renewed 39 of our 42 big four affiliated stations, all ahead of next year when we renew about 75% of our subscriber households. It’s helpful to have that visibility going into MVPD negotiations. Our third revenue line, core advertising held steady in the quarter despite the economic climate. Our largest category, services, continued to show growth even amid local business challenges while maintaining product and employees. Auto, our second largest category was down again for the quarter but up 20% in June after improving each month of the quarter. I’m not expecting auto to continue every month with year-to-year growth, but I do believe we’re starting to see improvement in the auto category. Travel and leisure had a good quarter, up double digits as Americans have returned to more active lives and experiences. For the third quarter, we expect core advertising to be down in the low double-digit percentage range as we are beginning to experience displacement from our projected $90 million of political ad revenue. We’ll also be cycling against last year’s Summer Olympics, the benefit of the NBA finals for our Phoenix ABC station in July, as well as last year’s strongest quarter of sports betting to support the launches in Arizona, Colorado, and Michigan. Before I wrap up, I’d like to share a highlight regarding our minority investment in the e-sports company, Misfits Gaming. We have developed a number of revenue-generating opportunities with them, including a live Minecraft-themed competition with some of the most popular Gen Z and millennial gaming influencers in the world. It will be held at Michigan State University on October 2. Misfits will produce the event and our three Michigan TV stations are taking the lead on sales and marketing. We expect to hold similar competitions in other states in the near future. Now here’s Lisa.

Thanks Brian, and good morning everyone. Pressures from the current macroeconomic climate continued to impact our advertising revenue in the second quarter, and yet despite these pressures, we were able to hold our revenue at the same level as Q2 of ’21 and deliver ahead of our peer network portfolio group and the national ad marketplace. Even digital streaming and technology companies are experiencing ad revenue declines due to the cyclical economic downturn, though all things considered, we believe our networks performed quite well. This is a short-term challenge created by the economic conditions, and we are well equipped to manage the rebound. One indication of our ability to be resilient is the viewership growth we are seeing across our portfolio. In Q2, the Scripps portfolio grew its total Nielsen-measured prime time audience by 6% among total viewers. We drew 70 million viewers across our network per month during the quarter, and they spent more than 11 hours with us each month. In addition, our share of linear viewing accounts for 26% of all network viewing among over-the-air households. Another sign of our resilience is our ability to optimize our advertising revenue streams through innovation. We have recently done so by creating a new political ad revenue opportunity for the national networks division, primarily with Ion. Until now, we’ve told you that though Ion is a collection of local stations, we exclusively sell it in the national ad marketplace like a cable network; that way, we can deliver an efficient one-stream national programming and advertising model. However, over the last several months, we have created the ability to sell geographically-based political advertising while preserving the efficiency of our national scaled approach. We have built the technical capability to insert political ads at the local level where demand is strong. We’re also leveraging Scripps’ in-house political expertise to help political ad agencies understand this new opportunity. We see 2022 as a year of learning in a few markets and have $15 million to $20 million laid into our outlook for the back half of this year. We then expect to grow the networks political revenue stream significantly in 2024. Now I’d like to share a few network highlights. The Bounce network performed especially well for us in the quarter in terms of both ratings and revenue. Early this year, we launched an effort to help Bounce connect more fully with the Black communities and audiences it serves. We have changed some of our programming strategies and increased our social media engagement. In return, we saw Q2 total day ratings increase by 5% among people 25 to 54 for the Bounce cable and over-the-air viewership, defying linear TV trends and driving up ad rates. Bounce revenue grew 38% in the quarter. In addition during this season’s upfront, Bounce garnered remarkable year-over-year CPM growth in the mid to high teens. Bounce also has a streaming channel called Bounce XL that is now available on eight of the top connected TV services and is garnering nearly 2 million hours of viewing per month. Court TV also delivered a strong second quarter with help from some celebrity dysfunction. The Johnny Depp-Amber Heard trial drove record viewership for the network and a 25% year-over-year increase in key viewer demographics. That compares favorably to our airing of the Derek Chauvin trial a year ago, so a strong basis. We’re expecting Court TV revenue to be up more than 30% for the full year, exceeding our initial expectations. In response to the current advertising climate, we have engaged in several expense control measures. Those include slowing hiring, moderating spending on non-critical capital projects, travel, and other discretionary operating items that won’t impact our growth strategy. Turning to distribution, we have been pleased by our steady cadence of connected TV launches this summer. All of our networks are fully distributed to audiences over the air and most have broad cable distribution. We also are capitalizing on the tremendous growth in CTV. As Adam said, it’s an all-of-the-above strategy in terms of serving audiences through their various TV viewing choices. The Ion network launched on Samsung TV+ in the spring and its revenue performance there has exceeded our expectations. Ion also launched on TCL and Amazon’s Freevee during the quarter, and all three of these platforms will launch our networks Ion Mystery and GritXtra this quarter. We’ve also reached agreements with Roku, Vizio, Zumo, and Tubi to carry our free ad-supported streaming networks on their platforms beginning this quarter. We expect these recent and upcoming launches to help drive a full-year increase in CTV revenue of more than 25%. Next, I’d like to share highlights from Newsy, which continues to establish itself as a significant national news brand, respected for its fact-based, opinion-free reporting. Newsy’s bureaus in multiple U.S. cities and its nimble production team give it important news-gathering advantages over coastal-based news outlets. For example, when news broke of the tragic shooting at Robb Elementary School in Uvalde, Texas, Newsy was the first national network on the air from the scene. The network’s programming, including prime time coverage anchored in Uvalde, were major drivers of viewership. To conclude, we were pleased to achieve division results this quarter that equaled our strong performance last year and were much better than the national ad market overall, and to deliver margins that are enviable in the industry. We have positioned this division to be resilient, and we look forward to our growth path just ahead. Now Operator, we’re ready for questions.

First on the line, we have Dan Kurnos with Benchmark. Please go ahead.

Great, thanks. Good morning. Lots to dive into here, but just before I start, Adam, I just want to congratulate you on your contract extension. I think it’s really well deserved, especially given the transformation you’ve taken the company through. Just wanted to throw that out there first.

Thank you, Dan.

Brian, regarding local markets, your Q3 situation is quite distinctive due to the NBA Finals and the Olympics. Can you provide details on what local performance looks like in Q3 without considering those events? We've heard that there is some recovery in the auto sector, but I'd like to understand how you see the overall progress in Q3 from a fundamental standpoint.

Yes, it's great to hear from you, Dan. As you noted, we are expecting a somewhat stronger decline compared to some of our competitors. This can be largely attributed to the fact that the Phoenix Suns hosted the NBA finals last year while we also had the Summer Olympics occurring simultaneously. Additionally, our presence was highly beneficial to sports betting during Q3 last year when Michigan, Arizona, and Colorado launched at the same time, which generated significant revenue. Currently, those markets are in maintenance mode and we do not have any new state launches in Q3. It’s important to recall that we were likely the only broadcast group last Q3 to announce that we exceeded our figures from Q3 of 2019, resulting in an impressive quarter for us. We reported $19 million in new business last third quarter. The impact of the Phoenix Suns’ success likely accounted for three or four points, helping align our results more closely with those of our peers. Observing the categories and monthly trends, Q3 is starting to resemble the performance of Q2. In Q2, April was disappointing with a 7.7% decline, but then May improved to about a half-point drop, and June saw an increase of a couple of points. In this current economic climate, people seem to be hesitant, waiting to see if they have products and personnel before making bookings. It appears Q3 might follow the same trend where July wasn't strong but August is showing significant improvement across almost all categories, and we still have a few weeks left to assess how September will unfold. I believe we could gain similar traction and momentum as we move forward.

That's quite helpful. It provides more insight into how to assess the delta. I want to shift quickly to Adam and Lisa regarding the national networks. There are many factors at play, including new network launches and upcoming upfronts. Your guidance aligns with our expectations, which is encouraging, especially since many are predicting a decline in national advertising revenue. Could you share the underlying trends you're observing and how you're optimizing yield? It seems that direct response advertising remains weak. As we approach Q4, I'm curious about what was sold in the upfronts and how we should assess the risk level and the expected benefits from the significant CPM increases. How should we view the networks business moving from Q3 to Q4?

Thank you, Dan. Our team is effectively managing our businesses during this difficult economic period. Although there have been general reports of weakness, particularly in July, the Scripps networks are not experiencing a downturn. In fact, our CTV revenues for July exceeded our expectations, and while the market remains challenging, the pace of scatter has improved compared to Q1 and Q2, both in the general market and on the direct response side. Our pipeline in the general market is relatively steady this far into Q3, and pricing on the direct response side has stabilized with a slight increase in demand. Our portfolio strategy appears to be resonating well even in this tough market. Regarding the upfronts, we were very satisfied with our performance despite the difficult macroeconomic context. We're still finalizing some negotiations, but this process has highlighted the significant value of our content portfolio and how we serve our advertising clients in a distinctive way. All of our networks have experienced growth in CPMs, with Bounce showing the most notable increase in the upfronts. Looking ahead to the fourth quarter, we’ve positioned ourselves to capitalize on what seems to be a gradually improving scatter market, even if it’s not dramatically better. Our scatter rates are typically 30% to 40% higher than our upfront rates, giving us ample opportunity for expansion in the fourth quarter.

Dan, the other thing I’d highlight from Lisa’s prepared remarks is the potential contribution of political in the third and fourth quarter. I think Dan, you may have been the one that asked on the call when we acquired Ion whether or not we thought political would be an option, and at the time we did reference the fact that Ion is sold in the national ad marketplace, but really thanks to, I think, the strength of our political office and presence in Washington DC and some really significant technological innovation that Lisa and her team have executed, we are able to generate upside in networks that we think will add on somewhere between $15 million and $20 million in political revenue on top of the $270 million we are already talking about in local. That’s experimental stage, to be quite frank. We really expect this to be something that could be quite significant in 2024, so stay tuned for performance on that as we move through the back half of the year, something we’re really excited about, a big opportunity for the Scripps networks to generate political from what we’re sort of referring to as server-side or transmitter-side ad insertion to take advantage of crowd-out.

Yes Adam, I didn't want to dominate the conversation, but first regarding the Magnite deal which allows expansion beyond your usual areas, and which I believe is not included in your political guide, I must say you all have been very innovative with the CT news desk, so congratulations on that. Thank you.

Thanks Dan.

Our next question is from Steven Cahall with Wells Fargo. Please go ahead.

Thanks. Maybe just a follow-up on that immediate point. The opportunity for political on Ion, whether that’s through the linear network or whether that’s in the digital space, is that included in the free cash flow guidance that you’ve given for the year, or would that be incremental to that? Then Lisa, maybe just sticking with Ion, thanks for some of those revenue trends at Court and Bounce. Was just wondering if you could maybe isolate Ion a bit in terms of how that’s performing concerning revenue growth and margins? I know the direct response in national has been tough in the macro, so just wondering if you could help us unpack some of the trends there. Then finally, Adam, on the marketing campaigns you’ve been doing for OTA, could you give us any sense of what the KPIs are you’re seeing there and how those are performing against some of your goals? Thank you.

Hey Steve, I’ll go first because it will be quick. Yes, the Ion political revenue was included in our original guidance of $400 million to $450 million at the beginning of the year.

Okay.

In terms of Ion, it has faced more challenges in the first half of the year because it operates more in the general market rather than direct response advertising, and we typically sell more during upfront periods. However, as I mentioned in response to Dan's question, we are starting to notice some improvements from Q1 to Q2 regarding the pace of the scatter market. We are also observing positive trends on both the general market side and the direct response side, leading to an improved pipeline specifically for Ion in the latter half of the year.

Steven, in terms of the leading indicators on the marketing campaign, it’s really very simple. In addition to, I think, the general lead generation metrics you’d expect when you’re pushing people to a website, we are working with retailers to track antenna sales. We expect antenna sales will open up opportunities for additional viewing, especially given our 26% to 30% share in the OTA marketplace, and we expect that to lead to higher revenue. We are still in the experimental stage or the earliest stage right now in 13 markets - we just started last month, but I expect as we head towards the third quarter and then fourth quarter, we’ll be able to give you an update on the efficacy of our campaign. But it really comes down to the opportunity this company has to disproportionately profit from the growth of the over-the-air marketplace, something we think is going to happen anyway as a result of the economy. It’s that and the NFL’s move to put everything on broadcast, we think bodes very well for the growth of the OTA marketplace.

Maybe Adam, just to follow up on that, it does look like cord-cutting picked up a bit in the second quarter. Do you have any data yet as to whether or not those folks are re-engaging on OTA as you planned?

Yes, I think the percentages of cord cutters and cord nevers that continued to add on a digital antenna to their self-bundle have remained steady. Somewhere between a quarter and 20% of broadband-only homes are leveraging a digital antenna. We think that should be higher. We think there is still not enough information out there about the opportunity for folks that use SVOD services to bundle in free premium programming from over-the-air, and we expect to inform them and educate them on that opportunity, working with retailers and installers to make it easy for them to do as well.

Great, thank you.

Thanks, Steven.

Next we’ll go to Craig Huber with Huber Research. Please go ahead.

Great, thank you. On the Scripps network side, wanted to ask if you could share some data with us on the ratings or viewership trends in the latest quarter that you have, please. Let’s start there.

Yes, Craig, regarding viewership, we observed that our prime-time audience grew by 6% among total viewers across our networks. I mentioned earlier that we reached nearly 70 million viewers across all of our networks during the quarter. In the second quarter, we once again increased our share in linear viewing. I noted that 26% of our over-the-air viewing occurs on our networks. Total prime-time viewership was up 6% year-over-year. This growth was driven by an increase in nationwide linear usage, even as overall viewing decreased by 8%. In many ways, this growth defies the current viewing trends. Although our ratings are influenced by the overall decline in TV viewing, our programming strategy and targeted investments are helping to counteract those trends.

The data you guys have, what percentage of the U.S. households do you think have an antenna right now?

I think the latest data indicates that about 30% of U.S. households are using an antenna. This is a growing trend, and we expect it to continue. Forecasts suggest it could rise to 45% within the next couple of years. Antenna sales have been consistently between 8 million and 12 million each year over the past few years.

Okay, and then I wanted to ask you, you talked a lot about the political opportunity with the Scripps network inserting political ads there. I assume those ads would get slotted in there where a promotional spot used to be, as opposed to something that’s taking away from a core advertising slot?

No, not necessarily, because we want to maximize the opportunity. We’re essentially running yield management with a pretty complicated algorithm that allows us to understand what the loss will be in the national reach when we do local ad insertion. What we’re actually running is direct response in that time period or in that avail, and so we’re able to cover the direct response ads without negatively impacting the direct response rates. We cover the direct response ads in the specific markets where there is high demand for political and where the CPMs are high enough that we incrementally improve the yield on the network.

Okay, very good. My last question, guys, if I could ask on the TV station side, Brian or somebody, the percent of retrans subs up for renewal this year, and what’s that number for next year? Just want to see if that’s changed at all.

Yes, hey Craig, it’s Brian. We’re done this year. Next year, 75% of our subs are up in 2023, drops back to about 5% in 2024, and then 25% come up in 2025.

Largely at the end of the first quarter and the second quarter, for your modeling.

Okay, great. Thanks guys. That’s all I had.

Thanks Craig.

Just as a quick reminder, if you would like to ask a question on the call, please press one then zero. Allowing a few moments, no further questions coming in.

All right, thank you very much, John. We’ll let you go ahead and give the replay information. Thanks to everyone for joining us.

Thank you. Ladies and gentlemen, this conference is available for replay. It starts today at 11:30 Eastern time through September 7, 2022, at midnight. You may access the replay at any time by dialing 866-207-1041. International callers please dial 402-970-0847. The access code is 4808441. Those numbers again - 866-207-1041, or 402-970-0847, access code 4808441. That does conclude your conference for today. Thank you for your participation. You may now disconnect.