Good day, and thank you for standing by. Welcome to the first quarter 2026 The E.W. Scripps Company Earnings Conference Call. At this time, participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Becca McCarter, Senior Director, External Communications. Please go ahead.

Thank you, Didi, and good morning, everyone. Thank you for joining us for a discussion of The E.W. Scripps Company's financial results and business strategies. You can visit scripps.com for more information and a link to the replay of this call. A reminder that our conference call and webcast include forward-looking statements based on management's current outlook and actual results may differ materially. Factors that may cause them to differ are outlined in our SEC filings. We do not intend to update any forward-looking statements we make today. Included on this call will be a discussion of certain non-GAAP financial measures that are provided as supplements to assist management and the public in their analysis and 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. Reconciliations of these measures are included in our earnings release. We will hear this morning from Chief Financial Officer Jason P. Combs, then Scripps President and CEO, Adam P. Symson. Here is Jason.

Good morning, everyone, and thank you for joining us. We are coming into this morning's call with strong momentum and good news about our financial performance and other activity. Here are a few of the highlights. We are progressing rapidly on executing our comprehensive transformation strategy, which has helped drive significant improvement in our first quarter net leverage to under four times. Our Local Media division delivered a strong performance with industry-leading 7% core advertising revenue growth, driven by our unique live sports strategy. We launched the Scripps Sports Network, a premium free streaming channel. We are entering a midterm election cycle with strategic market exposure in key battleground states. And we continue to optimize our portfolio through strategic asset transactions, generating $123 million in gross proceeds from recent sales of two stations. We also continue to work towards the closing of our station swaps with Gray and pursue additional M&A activity to support debt reduction and enhance operating performance. In addition to those recent highlights, we are pleased to have just successfully completed a new affiliation agreement with our largest network partner, ABC, covering 17 ABC affiliates. With that overview as a backdrop, I would like to review our first quarter financial results, and then I will discuss second-quarter guidance, followed by details on our improving debt position. I will conclude with a review of our EBITDA improvement plan. I will present our first quarter Local Media division results on a same-station or adjusted combined basis, removing the Q1 2025 results of the two TV stations that we have now sold and reflecting our addition of the Lexington ABC affiliate. During the first quarter, our Local Media division revenue was $331 million, up 5.8% from first quarter 2025. Core advertising increased 7%. Our services, automotive, and gambling categories all grew in the quarter. Local core advertising year-over-year growth was largely driven by advertising sales tied to our National Hockey League telecasts. We saw a strong contribution from the addition of our newest rights agreement with the Tampa Bay Lightning, and beyond this new partnership, we also saw strong growth in our existing NHL deals with the Vegas Golden Knights, Utah Mammoth, and Florida Panthers. Our strategy is designed to drive year-over-year growth across both our existing deals and new partnerships. And last month, we announced a fifth full-season NHL sports rights agreement with the Nashville Predators to start this fall. The Winter Olympics and the Super Bowl also contributed to our Q1 core advertising growth. Political advertising revenue was nearly $9 million as we begin what is expected to be a record-breaking spending cycle for the midterm elections. This year, we forecast strong spending in our markets due to U.S. Senate and gubernatorial races in Arizona, Colorado, Michigan, Nevada, Ohio, and Wisconsin. We also are watching growing competitive situations in Florida and in Montana. Local Media distribution revenue increased 2% again, on a same-station basis. Expenses for the division increased about 2.4% year over year. Excluding the impact of our expenses tied to our new NHL team deal, expenses were flat. Local Media segment profit was $44 million compared to $32 million in Q1 2025. For the second quarter, we expect Local Media division revenue to be up low single digits. We expect core advertising to be down low single digits, without the benefit of live sports for most of the quarter. We expect Q2 Local Media gross distribution revenue to be impacted by our impasse with Comcast, which ran from March 31 to May 5. Based on that timing, we still expect full-year gross distribution revenue to grow in the low single-digit range but now expect net distribution revenue to grow in the low double-digit range, a slight change from our previous guidance. We expect second-quarter Local Media expenses to be flat to 2025. Now let us review the Scripps Networks division first quarter results and second-quarter guidance. Once again, I will be presenting the results on an adjusted combined basis, in this case adjusting for the impact of the Court TV sale. In the first quarter, Scripps Networks revenue was $174 million, down 9.5% from Q1 2025. Connected TV revenue was up 26% from the same quarter last year. The division's expenses for the quarter were $126 million, up 1%. Scripps Networks segment profit was $47.5 million compared to $66.8 million in the year-ago quarter. For the second quarter, we expect Scripps Networks division revenue to be down about 10%. The networks are facing a softer market from macroeconomic conditions impacting the direct response marketplace and external measurement pressure from Nielsen due to recent methodology changes. Adam will talk more about this in a moment. We expect Scripps Networks Q2 expenses to be up in the low single digits. Turning to the segment labeled Other, in the first quarter we reported a loss of $6 million. Shared services and corporate expenses were $26.6 million. In the second quarter, we again expect that line to be about $27 million. Higher medical claims and increased insurance premiums are causing that line to go higher than usual. For the first quarter, the company is reporting a loss of $0.20 per share. The loss included a $30 million gain on the sales of Court TV and two television stations, WFTX in Fort Myers, Florida, and WRTV in Indianapolis. These sale transactions decreased the loss attributable to shareholders by $0.25 per share. In addition, the preferred stock dividend has a negative impact on earnings per share even when we do not pay it. This quarter, it reduced EPS by $0.18. We had $20 million outstanding on our revolving credit facility at the end of the quarter. On April 30, we entered into an agreement to extend the July 7, 2027 maturity date of our revolving credit facility to July 7, 2029 with commitments of $200 million. For the first quarter, cash and cash equivalents totaled $84 million. Net debt was $2.2 billion as defined in our credit agreement. Also during the quarter, we paid down $10.2 million on our B-2 term loan. In addition, we paid down $20.4 million on our B-3 term loan. Since the end of the quarter, we have paid down an additional $30 million on the B-2 term loan, for a total of just over $60 million in term loan paydowns since the beginning of this year. Net leverage at the end of the quarter was 3.9 times, per the calculations in our credit agreement, which includes certain pro forma adjustments relating to our transformation efforts. As we announced in February, our company transformation plan includes growing enterprise EBITDA by $125 million to $150 million. Our EBITDA improvement plan balances rightsizing our current expense structure with implementing new ways to grow revenue and profitability. You will start to see the financial benefits of our plan in the second half of this year. We expect total in-year EBITDA impact of $20 million to $30 million and an annualized run rate of about $75 million as we move into next year. And now here is Adam.

Thanks, Jason, and good morning, everybody. At Scripps, we are in the midst of executing a significant transformation, moving now from the detailed planning stage into execution, and I am pleased to report that we are right on track. I like to say that this transformation is a refounding of the company. We are bringing the values, ethics, and mission of our founder, Edward Willis Scripps, forward 150 years to set the company up in a way I would like to think he would were he here today. I have been doing a lot of research on our founder. E.W. was fiercely protective of his newsroom journalism and editorial independence. He was entirely committed to serving the people in the communities where he operated, and he was well known, maybe even notorious, for his dedication to operating with efficiency to ensure he would have the margin to carry out the mission. A hundred and fifty years ago, E.W. focused on his consumers' problems and commercialized the solution. The assets that make up our company may be different today, but our transformation is grounded in the same customer-first focus. Here is an example of what this is looking like. In our newsrooms, we have already been changing the model. We are moving from a broadcast-centric operation that has historically served our audiences during defined time periods to news operations that leverage automation, AI, and technology to serve consumers when and where they expect to get their local news, especially as they have moved to streaming. Leveraging technology has allowed us to deepen our commitment to local news, getting more of our teams out of the newsroom and into the community, putting more reporters in the field to live in the geographic areas where they cover. All of it is in service to our vision: we create connection. This is not incremental change. It is a complete realignment of our newsroom operations, our business models, and our culture around the opportunities we see clearly: streaming platforms, productivity-enabling technologies, and our unrivaled ability to create connection for the people and the businesses in the communities we serve. This is just one example at Scripps of how we are upending what needs to be changed, fueling the fire where we see top-line growth, as we see in streaming, and going farther and faster with what is working well, like our sports strategy. Let us talk about sports. In Local Media, our live sports helped Scripps deliver an industry-leading core advertising performance in the first quarter, up 7%. As Jason said, this came from new partnerships and from organic growth in every one of the markets where we are executing the strategy. And we are far from done. Just a few weeks ago, we announced the new full-season local broadcast agreement with the NHL's Nashville Predators, and I expect more core growth-fueling opportunity to come. Now for the second quarter, the live sports action shifts to our Scripps Networks and the WNBA and the NWSL. The WNBA's preseason game between the Indiana Fever and the New York Liberty on April 25 was ION's most watched preseason game ever. Tonight, the WNBA regular season tips off with a doubleheader on ION, with tremendous excitement about the return of Caitlin Clark and this year's class of exceptionally talented draft picks. Scripps Sports will once again broadcast the most WNBA games of any network, bringing a WNBA doubleheader every Friday night all season long to fans nationwide. Advertiser demand is high for women's basketball, as well as for our full slate of women's sports. It is now clear that Scripps is the leader in women's sports, showcasing women's athletic achievement with rights for the WNBA, NWSL, PWHL hockey, MLV volleyball, Athlos track, college basketball, pro cheer, and our newest partner, PBR's premier women's rodeo, which we will be bringing to our network GRYT and ION. We recognized early that Americans were embracing the quality and professionalism of women's sports, and we are pleased to have become the go-to platform for the brands that want to connect with fans. Next week, the Professional Women's Hockey League's Walter Cup finals will begin on ION. We are very pleased to bring this to national television for the first time and to have Amica serving as our presenting sponsor and Discover as an additional sponsor. They are just two of the hundreds of blue-chip advertisers we have brought onto our platform through our sports strategy. In March, to capitalize on the marketplace growth and our success in connected TV revenue, we launched the Scripps Sports Network, a new streaming channel that leverages our existing sports rights, some efficiently acquired new rights, and sports-themed programming. We are streaming more than 100 live games a year along with original sports programming, documentaries, and talk shows. And we have secured broad distribution across the major streaming platforms, including Roku, LG, and Samsung, making it easy for fans to find the sports, teams, and players they love. Connected TV continues to be a growth driver for Scripps, up 26% in the first quarter, and I expect we will continue to leverage our premium programming and live sports to make this a differentiator for us among our peers and competitors. While we expect to capitalize on live sports on ION in Q2 just as we have with our Local division in Q1, we are navigating some external challenges with national advertising revenue. As Jason mentioned, we are seeing some market softness due to the volatile economy. Networks' direct response ad spending, in particular, has been impacted as consumers feel the pain of higher prices, especially now at the pump. We have also been affected by a recent Nielsen audience measurement change that has artificially shifted household viewership weighting in favor of cable networks. Because all Scripps networks are distributed over the air, this change has negatively impacted audience delivery. Nielsen's new methodology is inexplicably resulting in frustratingly inaccurate reports of ratings declines for over-the-air viewing and streaming. This disproportionately impacts the measurement of our multicast network viewers who are most vulnerable to affordability issues, including those in rural communities, people of color, and older Americans. The fact is that we have seen no let-up in the demand for our advertising products in the general market, and sales execution is on point. But Nielsen's overnight change suddenly impacted our supply of impressions, impacting our revenue. We began seeing a revenue impact from Nielsen's methodology change in March, and since then, our team has been advocating aggressively for Nielsen to make a public disclosure outlining the magnitude of the discrepancy in their data. Of course, I cannot end the discussion on advertising without at least a nod to what we expect to be this year's political revenue windfall as a result of our excellent station footprint, our focus on sales execution, and the record amount of money expected to be spent on the upcoming midterms. We are off to a good start and expect political to be a great story on top of this year's industry-leading core revenue performance we are putting up this year. I would like to take a moment now to celebrate some important recognition of the work we do on behalf of our viewers and communities. Scripps has received recent awards and recognitions from three important national organizations. We were honored with six nominations for national News and Documentary Emmy Awards, including five for Scripps News and one for WEWS in Cleveland. Scripps News also was recognized with three prestigious National Headliner Awards, including a Best in Show honor, and two Deadline Club finalist nominations. Our local station KNXV in Phoenix also received three National Headliner Awards and WTMJ in Milwaukee received one. We are proud of the recognition of our commitment to journalism that improves the lives of those we serve, holds the powerful accountable, and upholds the tenets of our democracy. Serving our democracy is one of the things Scripps has done best for nearly 150 years. There is a lot of uncertainty in the world today, from macroeconomic to the media sector. At Scripps, we are acting with urgency on what we can control by employing new technologies to create operational efficiencies, capitalizing on accessible growth areas such as sports and CTV, and improving our balance sheet. This is the essence of our transformation plan, and you are beginning to see how this plan will carry us into the next bountiful chapter of our long history. We will now open the call for questions.

As a reminder, to ask a question, please press 11 on your telephone. Our first question comes from Daniel Louis Kurnos of Stifel. Your line is open.

First and foremost, Jason, thanks for the recast; super helpful. Just a couple of housekeeping questions. The guide that you gave for Q2, that is relative to the adjusted combined recast, not the as-reported from February last year, correct? And then, Adam, on Scripps Sports Network—super smart—you have been leading the charge in CTV. You had your upfront in late March and launched the network before then. You picked up PWHL, PBR, and now women’s PBR. You have got a real leadership position on the women's side. Can you give us your thoughts on advertiser feedback and commits as we look ahead? And you have been very clever with rights acquisition in an inexpensive manner. Sometimes there is confusion between what you can show on streaming and what you can show on traditional broadcast, so help us think through that equation too.

That is off of the adjusted combined recast that we provided.

First and foremost, Dan, I like to think that we have embraced women's sports, not put it into a stranglehold, but I appreciate what you are getting at. We have been very intentional in the way we have been acquiring sports, both on the local side and the national side, and see our opportunity as recognizing the value of the distribution we bring to the table. Whether it was with our initial deal with the WNBA, the NWSL, or any of these other sports deals we have done, we have been looking for partners who recognize that we bring the opportunity to showcase their league, their games, their athletes, on the most ubiquitous platform available, because ION is uniquely positioned to be available on OTA, on pay TV, and on streaming. The launch of Scripps Sports Network is a continuation of that strategy because it not only positions certain parts of our broadcasts in additional new real estate in the streaming space through simulcasts—allowing us to take some of ION's most premium time periods and now simulcast them on streaming platforms, essentially expanding the reach of those games and our network—it also allows us to carefully and efficiently acquire new rights for insurgent or ascendant leagues looking to get distribution for their games and allows us to test and learn. For example, many of the PWHL games and Major League Volleyball are available on the Scripps Sports Network, and then the finals end up being broadcast on ION. Our move to put all of that on ION has been about really serving the advertising environment. We see significant demand from advertisers looking to invest behind women's sports, and we went to the marketplace knowing there was already demand for the assets we were acquiring. That will benefit us in linear and in the streaming space. We will continue to be careful and efficient in the way we acquire rights but also really aggressive in the way we demonstrate the value of our distribution. Relative to the ad marketplace, there has been no let-up in demand for live sports. When you look at our performance relative to general market cable and broadcast networks, you see the benefit of our sports strategy. We are just now moving into the second quarter where we have that benefit going into the summertime; we did not see that in the first quarter. Nevertheless, there has been some softness in the national ad market, and I think Jason can provide a little more color on the national ad marketplace and even a midterm view of what we expect from Networks margins.

We guided to down 10% for Scripps Networks in Q2, and that is driven by a couple of things: ratings declines tied to changes in Nielsen methodology that Adam talked about, as well as macroeconomic and geopolitical conditions that are driving uncertainty and have created a weaker marketplace for national advertising. Networks that over-index on over-the-air carriage are seeing pressure versus cable networks that are generally seeing significant ratings increases under the new methodology, and we will continue to engage because we believe that methodology is flawed. Beyond that, the current macroeconomic environment is impacting performance-driven advertisers in the direct response space. Inflationary pressure and higher fuel costs continue to weigh on the American consumer, and geopolitical instability has created some hesitation and ripple effects. In the short term, that has created a drag on revenue and margin in our segment. We worked hard to get Networks back to a 30% margin business. As you look at the implied guide for Q2 and our results for Q1, I would expect our second-half margin to be higher than our first half. Q3 is the heaviest sports quarter in terms of inventory, and Adam talked about the excitement we continue to see for premium sports inventory. Q4 also brings in seasonal healthcare ad dollars, and you will start to see some impact from the transformation efforts in the second half as well. We remain committed to the Networks business as a 30% margin business.

Understood. On monetization, we are seeing more live sports move towards programmatic, especially in CTV. How do you think about pushing deeper into DSP relationships, leaning into the ad tech ecosystem, and getting better fill—even if CPMs come under pressure—to ultimately improve monetization?

I would argue we are operating a best-in-class CTV platform. Going back to the earliest years of digital and CTV, we have been focused on maximizing the opportunity with direct sales and programmatic. The leadership we have at the Networks level focused on monetizing our CTV across the enterprise is second to none, and we are well invested. You can see that in the 26% growth, following significant growth in prior years. We have not just been riding market growth; we have been catalyzing our own opportunity—improving our programmatic stack, strengthening ad tech relationships, and leveraging our significant position with distributors. We represent some of the most watched premium channels in the CTV marketplace, which gives us leverage to negotiate terms and partnerships that benefit us and the platforms. There is incremental opportunity ahead, including leveraging technology to improve monetization in CTV and local CTV, and significant opportunity with political in CTV. We are already seeing that this year, allowing us to sell connected TV advertising out of our political office outside of the markets where we have local stations. Today, we sell nationwide, and a fair amount of the connected TV political advertising we saw in the first quarter came from outside our markets. We are off to a really good start there and will keep the pressure on.

Thanks, Dan. Our next question comes from Craig Anthony Huber of Huber Research Partners. Your line is open.

Thank you. Can you give us an update on the $125 million to $150 million transformation program—specifically where you think the annualized run rate will be at year-end and any changes on that front?

Last quarter, we gave an annualized run rate of $60 million to $75 million for this year. We adjusted that this earnings cycle up to about $75 million, and we would say we are making good progress. I will also point out the move we had in leverage this quarter and explain that a bit. When we announced the transformation initiative, we did a lot of work to lock down our bankable plan of initiatives expected to be implemented over the next 12 months. Per the terms of our credit agreement, we are able to reflect those retroactively back into our trailing eight-quarter EBITDA for purposes of leverage calculation. That is the driver behind the move in leverage this quarter down to 3.9 times, tied to initiatives we expect to have fully implemented by the end of Q1 next year. Adam can talk a bit more about the bigger picture.

We are executing a comprehensive plan that allows us to rethink everything about how we deliver service to our customers—both audiences and advertisers. We spent months examining the opportunity to remake the company across every corner of the business, front office and back office, and now we are in implementation. I received a lot of comments about how confident I sounded last quarter when I said “take it to the bank.” I am as confident today that we are going to improve EBITDA by more than 30% to emerge a stronger, more nimble, and more aggressive company oriented for growth. It is all about our customer, and it is being done through the lens of our vision: we create connection. Much of it involves technology, AI, and automation and is oriented toward growth. Importantly, we are on track to achieve exactly what we set out to do.

On AI, can you give a bit more flavor on how you are using it for services and efficiency? Is it possible to quantify how much of the $125 million to $150 million improvement comes from AI?

I cannot quantify that yet. As we roll out different initiatives, when they are in the rearview mirror, we can provide more color. Broadly, technology has opened the door for all companies to be more effective and efficient. Traditionally, the broadcast industry has been too slow to adopt these technologies. We are now stepping back and rebuilding the company in both the front office and back office. Several years ago, we pioneered a new way of producing newscasts that leveraged technology to reallocate resources—putting more reporters in the field and paying higher wages. That became the basis for our neighborhood news strategy and geographic beats. We continue to have more reporters in the field than competitors, which is what consumers care about, and we are leveraging AI and automation to facilitate that. We also see significant top-line upside from technology in revenue yield management and account executive productivity—tools that let AEs spend more time prospecting and closing and less on administrative work. These are not themes; they are plans with real business cases developed by our employees. Even the cost savings opportunities will improve our product—both content and advertising—improving service to audiences and advertisers and generating additional top- and bottom-line value.

Lastly, on the macro environment, is it letting up or getting worse? Any categories beyond direct response that you would call out? And in Q1, did you see changes tied to geopolitical events, and has that continued?

On the Networks side, the impact is tied to macroeconomic conditions and geopolitical conditions—inflation, gas prices, all those things—which are creating headwinds in national advertising. We have not really talked about the Local ad marketplace yet. In Q1, Local core was up 7%, the best in the industry. For Q2, we guided to down low single digits, which is better than our peers. Unlike Q1, Q2 does not have the same level of premium sports inventory, and we are seeing a little noise in some categories, but all in all, from a Local core perspective, things are pretty stable.

Thank you. Our next question comes from Avi Steiner of J.P. Morgan. Your line is open.

A couple of questions on the ad environment. Can you refresh us on your exposure to direct response advertising and how quickly it typically snaps back in prior down cycles? Is it leading or lagging?

It varies by network, but we do have a material portion of Networks revenue tied to direct response advertising. DRA is tied to broader macro trends and can both downturn quickly and bounce back quickly as well. We are seeing some noise now tied to macroeconomic and geopolitical factors and the Nielsen methodology changes impacting ratings.

From a speed perspective, it snaps around quickly. A good example is what we saw in the fourth quarter: at the beginning, we were a little soft with DRA due to the government shutdown’s impact on employment and Medicare enrollment. When the shutdown ended, it snapped back. Uncertainty is not good for the American consumer; the greater the certainty, the easier things will be in the ad marketplace.

On the enterprise value growth via cost savings and revenue growth initiatives, what is the cost to achieve for the transformation initiatives and timing?

We guided to EBITDA lift of $125 million to $150 million. We estimate $40 million to $50 million of cost to achieve, with the largest portion falling in the back half of this year.

The recast financials in the supplemental disclosure were helpful. Could you provide the LQ8 EBITDA for the same base of assets underlying that disclosure? And what is left to close, and dollars in and out?

The LQ8 that supports the 3.9x leverage calculation is $568 million. We are awaiting closure of our swaps with Gray and also have a transaction with Inyo before the FCC and DOJ. On dollars, I do not have the specific number readily available on this call. The transformation-related cost savings embedded into that LQ8 are a little over $100 million annualized; in our most recent announcement, we cited $53 million, with the exact contribution dependent on timing.

Thank you. Our next question comes from Shanna Qiu of Barclays. Your line is open.

Thanks for taking my questions. Could you give us a sense of how much of the Scripps Networks top-line guide decline in Q2 is related to the overall macro and ad environment versus the Nielsen methodology change?

We are not breaking it down specifically, but both are driving a material impact to the revenue guide.

On the Networks side, we sell impressions, and the impressions are determined by your currency. In mid-February, overnight, Nielsen's methodology change did not impact sales execution or demand; it impacted how many impressions we had to sell. We are working with Nielsen to right that ship and making changes on the marketing and programming side to bolster our programming strategy and increase impressions. That is separate from some of the macro softness in DRA. The general market has held up nicely, likely due to our sports strategy and strong sales execution.

You mentioned you expect full-year gross distribution revenue growth of low single digits. Any thoughts on the pending Charter–Cox merger, and is that reflected in your gross distribution guide?

We do not generally talk about specific contracts, but we feel good about that guide. We went through an impasse in the second quarter with Comcast and were able to maintain our guide on gross and make only a small change in our net guide from low teens to low double digits. While it creates a short-term blip in Q2 financials, we are pleased with what that deal means in the midterm and long term for us.

We have a follow-up from Craig Anthony Huber of Huber Research Partners. Your line is open.

On the Nielsen change, are you willing or able to talk about the percent hit to impressions and how you view it? And has Nielsen provided any recast numbers?

I do not think quantifying it publicly benefits us. You have heard similar references from other companies with national broadcast network exposure. This is something all the broadcast networks and streamers are dealing with. We are working with Nielsen to address this so the ad marketplace can make decisions with a methodology that reflects what is actually happening. It is obviously not the case that cable is growing while streaming and OTA are declining. Everyone recognizes changes have to be made to improve accuracy. As for recasts, I cannot speak for Nielsen. The changes went into effect in mid to late February, and we have not seen public recasts.

Thank you. Our next question comes from Steven Lee Cahall of Wells Fargo. Your line is open.

Thanks for fitting me in. Jason, can you help us understand the sequential change in Local core ad growth going from plus 7% to down low single digits? There is the change in local sports and the Comcast blackout. What does the underlying core look like within that—how much of the deceleration is sports versus underlying trends?

Q1’s up 7% had a significant benefit tied to our NHL deals and also the Olympics in the marketplace. If you take out the sports impact, the overall core marketplace is pretty consistent and not significantly impacted by broader economic factors. The down low singles we guided to for Q2 is better than most in our industry, which have guided down low to mid singles. From that standpoint, core is a strength right now.

I hope investors and analysts recognize that our first quarter performance is cause to celebrate because we are executing a strategy that creates significant growth opportunity—cyclical as it may be. As we move to Networks in Q2 and Q3, we will see that benefit there. Running a strategy that allows you to vacuum up more core revenue in a local market comes with cyclical dynamics tied to sports windows.

On Networks growth, Q3 is the biggest for sports, but sequentially 1Q to 2Q has more sports as well with WNBA restarting. If the market has not changed as we get past Q3, do we see a big drop-off in the rate of decline, or are there other levers—programming or pricing with the upfront—you will pull in the back half?

From a margin perspective, we expect the second half to be higher than the first half. We have some sports in Q2, yes, but they ramp to a full quarter in Q3. I would expect year-over-year changes to improve in the back half. You also pull in healthcare in Q4, and transformation benefits will start to roll through. Even though we are trending below the 30% target now, we remain committed to making the decisions needed to get Networks back to a 30% margin.

It is too early to talk about upfront volume or pricing. While Nielsen’s change may have negatively impacted impressions for OTA and streaming, the ad marketplace is responding very well to our upfront message: our distribution platform that grows OTA and streaming and our differentiated programming—live sports, specifically women’s sports. Advertisers recognize what is going on in cable and are shifting dollars into more premium products. That is behind significant new advertisers coming onto our platform, like Amica as presenting sponsor for the Walter Cup finals on ION, historically not an advertiser on our platform but now moving spend to reach their audience with our product and distribution.

Lastly, on leverage and preferreds: you are able to take advantage in your credit agreements of the transformation initiatives, which gives you some breathing room. Does that mean you can start to devote this year’s free cash flow toward the accumulated pref dividends or otherwise negotiating the pref? How are you thinking about it?

We were already well under our covenants, so while the transformation provides a benefit to our leverage calculation, there was already significant cushion. On the Berkshire preferred dividend, based on last year’s refinancings, we cannot pay the dividend until 2027 unless our leverage is below 4.25x—which we are—and we have less than $50 million outstanding on the B-2 term loan. Think of it this way: those are the requirements to begin paying the dividend. Once we meet them, we would intend to start paying the dividend again. Once we get leverage into the low to mid 3x, we would begin looking to address principal, not all at once but likely in $60 million increments.

This concludes our question-and-answer session and today’s conference call. Thank you for participating, and you may now disconnect.