Gray Media Inc (GTN.A) 2017 Q4 法說會逐字稿

Good day, and welcome to the Gray Television's Fourth Quarter 2017 Earnings Conference Call. Today's conference is being recorded.

At this time, I'd like to turn the conference over to Hilton Howell, Chairman, President and Chief Executive Officer. Please go ahead.

Thank you, Ashley. Good morning, everyone, and thank you for joining us this morning. As our operator mentioned, my name is Hilton Howell, and I'm the Chairman and the CEO of Gray Television. I'm also joined, as usual, by our Chief Legal and Development Officer, Kevin Latek; and our Chief Financial Officer, Jim Ryan.

We will begin this morning with a disclaimer that Kevin will provide.

Thank you, Hilton. Good morning, everyone. Certain matters discussed in this call may include forward-looking statements regarding, among other things, future operating results. Those 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 very important factors. Such factors have been set forth in Gray's most recent reports filed with the SEC and included in today's earnings release. The company undertakes no obligation to update these forward-looking statements.

Gray uses its website as a key source of company information. The website address is www.gray.tv. We will post an updated investor deck to the website in the next couple of weeks.

Included on the call will be a discussion of non-GAAP financial measures, and in particular, broadcast cash flow, broadcast cash flow less corporate expenses, operating cash flow, free cash flow and certain leverage ratios. These metrics are not meant to replace GAAP measurements, but are provided as supplements to assist the public in their analysis and evaluation of our company. We include reconciliations of the non-GAAP financial measures to the GAAP measures in our financial statements that are made available on our website.

And now we turn the call to Hilton.

Thank you, Kevin. 2017 was a year that saw dramatic changes in the regulatory landscape for broadcasters, with more yet to come, as well as a slightly more challenging local environment than we had originally hoped. Nevertheless and through it all, Gray turned in an absolutely outstanding year.

As you saw in our earnings release this morning, our fourth quarter 2017 local and national advertising revenue increased by approximately $21 million or 16% compared to the fourth quarter of 2016. For all of 2017, our combined local and national advertising revenue increased $68 million or 14% compared to 2016. Our total revenue for full year 2017 set a new company record of $882.7 million, which represented a 9% increase over the prior year.

For all of the year, our fully diluted net income per share was $3.55, which was also a new record for Gray. This earnings per share figure includes a net onetime benefit related to the FCC spectrum auction proceeds and last December's tax reform. Nevertheless, excluding these onetime benefits, our 2017 fully diluted net income per share would have been $1.04, and that figure would also have set a new all-time record for Gray Television.

Importantly, we are better positioned to capitalize on new business, regulatory and political opportunities in 2018 than we could have imagined just of a few short months ago. As you know, we raised approximately $0.25 billion in gross proceeds from a secondary equity offering in December 2017. This equity raise, when combined with the substantial cash generated from our business, provides us with tremendous dry powder to pursue select acquisitions that meet our exacting criteria.

Moreover, we are very proud of our success in growing the company through prudent cash flow-accretive transactions while simultaneously deleveraging our balance sheet. In the 4 years starting November 1, 2013, we have invested approximately $1.5 billion to acquire market-leading local television stations that expanded our scale from 36 stations in 30 markets to over 100 television stations in 57 markets. In addition, over the 6 years ending December '17, we lowered our total leverage ratio net of all cash on our balance sheet from 7.5x trailing 8-quarter cash flow to 4.2x.

Stated differently, while we proceeded to grow the company very quickly, we also managed to decrease our net leverage by an impressive 45%. At year-end 2017, our cash balance stood at $462 million. Absent acquisitions in 2018, our anticipated total leverage ratio will drop to the very low 3s.

In short, we are very pleased with the progress we have made to date, and we are committed to continuing these trends of growing cash flow, expanding our portfolio and reducing leverage over time.

As impressive as our history is, we are keenly focused on growing Gray's future. We are continually and actively working to make our company and our stations ever more efficient at every single level. We are working more closely with our advertising clients, especially national and political buyers, than ever before. Our retransmission consent agreements are largely renewed on quite favorable terms, while our network agreements, with one exception, are now in place for the next few years.

We are seeing and fulfilling increasing demand for political advertising almost every quarter for the past few quarters, and all signs point to a robust 2018 political season for our top-performing local news television stations. And as always, we remain quietly busy exploring numerous and various opportunities to continue growing our company through both large and small transactions that will make Gray an even stronger player in the broadcast industry.

At this point, I will turn the call over to Kevin and Jim. And after their remarks, we will open up the line for any questions you may have of any of us. Kevin?

Good morning. Since our prior earnings call, we received the best overall set of Nielsen sweeps reports in our company's history, and in many respects, in anyone's history. We detailed just a few of the milestones in a press release that we issued early last month. It's worth taking a moment now to reiterate the highlights of those highlights.

Specifically, during the November '17 sweeps period, Gray's more than 100 television stations collectively produced and aired approximately 7,200 hours of original local news content in November 2017.

Our stations also finished with these impressive results: 57 markets with the #1 and/or #2 ranked television stations with the highest all-day ratings in their markets; 40 markets with the #1 ranked station in all-day ratings; 40 markets with the #1 ranked station for local news ratings; 9 markets with 90% or more of all local news viewing; 29 markets with 50% or more of all local news viewing; and 26 markets with 50% or more of total broadcast viewing.

In fact, during November, the #1, #2 and #3 highest rated news programs across every local television station, national broadcast network and cable network news program aired on Gray's television stations. These and many other examples of our uniquely strong, stable local television stations allow us to achieve the benefits and scale that otherwise should be out of reach for a broadcaster that reaches just 11% of U.S. television households.

And that's actually a perfect segue to retransmission consent agreements. We've now completed the renewal of over 350 separate retransmission consent agreements that expired at the end of 2017. We have 2 negotiations still ongoing that we anticipate completing in the coming weeks. Overall, we are very pleased with the results obtained.

Due to the still ongoing retrans negotiations, we are providing a wider-than-normal range of guidance for retrans revenue in the first quarter. This range anticipates that 2018 will represent another year when our gross transmission revenue will increase by more than 20% on a year-over-year basis.

The strong retrans results confirm that we -- what we've been saying for 2 decades, namely, that vertical scale of strong television stations can be every bit as valuable as horizontal scale of numerous stations reaching many more households. This message has been reinforced through our political advertising results.

In 2016, notwithstanding the many headwinds and surprisingly noncompetitive races, Gray still posted $9.63 in political revenue per TV household in our markets. This figure represents not only the highest average in the industry, it's also twice as high -- almost twice as high as nearly any other broadcaster, including those broadcasters who, unlike Gray, had multiple television stations located in the hottest political markets in 2016.

Throughout 2017, we consistently beat our guidance for political revenue as we kept experiencing higher spending and more competitive special elections in the off year than we had anticipated. Looking ahead to 2018, we have Governor races in 81% of our markets; Senate races in 65% of our markets; and House races, of course, in every market.

Some months ago, we began airing political ads for some of the 2018 primary and even some November 2018 general elections. Moreover, with political experts openly predicting a possible Democratic takeover, the -- of the Senate and/or the House, we believe that political viewership, political fund-raising and political ad spending could be quite robust in 2018 for the entire industry, and especially for those with news-leading local television stations like ours.

Finally, in terms of M&A, quite simply, we are relieved that the FCC's local ownership rules now reflect some common-sense reforms and have gone into effect. These new rules, coupled with the end of the FCC's quiet period and subsequent tax reform, should open new opportunities for Gray to continue its efforts to acquire market-leading local television stations.

What we will not change, however, is our approach to transactions, which means that will continue to be patient, opportunistic and disciplined as we wait for the right acquisitions that fit our culture and model at attractive prices. We expect to remain busy in this front throughout the year, although we do have nothing to disclose at this time.

And now I turn the call over to Jim Ryan.

Thank you, Kevin. Good morning, everyone. Our earnings release 8-K will be -- is being filed presently, and it also includes an update of combined historical data through the fourth quarter of '17. So there's a matched set of combined historical data information available from 2014 to 2017 by quarter. And again, that's in the 8-K that's being filed presently. Our 10-K will be filed a little later today.

As Hilton and Kevin said, we were very pleased with the overall results of Q4 and of the entire year of '17. A couple of particular things to note. We finished the year with cash on hand of $462.4 million, and as Hilton said a little bit earlier, our leverage ratio on a trailing 8-quarter basis was at a historic low of 4.16x. Absent any significant M&A in 2018, we currently expect our year-end '18 leverage will continue to decline significantly, and net of all cash, will be somewhere in the lower 3s.

Free cash for 2017 on a combined historical basis was $173.8 million. We have now, as of the end of '17, fully utilized all of our NOLs, and we are becoming a federal taxpayer in 2018. We're currently estimating that federal cash taxes in '18 will be somewhere in the mid-$40 million range. With that said, we still currently expect that free cash in 2018 will exceed $200 million, and that is consistent with what we've been saying for a year now. As a housekeeping matter, an effective tax rate for GAAP purposes will be somewhere, we expect, between 25% and 26%.

Our Miller Kaplan market share reports that cover 33% of our market show that the aggregate share of market revenue, which is nearly 40%, has remained generally consistent for both the fourth quarter and the full year, each of the past 3 years. And we're very pleased with that.

Also as we said, we are pleased with fourth quarter results, but it did come with some challenges that are continuing into the first quarter. In Q4, we saw auto advertising was softer than anticipated, especially in December. We also saw several communications companies reduce spending in the aggregate by nearly $1 million very late in the quarter. And McDonald's shifted its local spending from our stations to the network, and that was $300,000 in December.

In looking at Q1 expectations, it's clearly a mixed story. We obviously benefited from NBC's February broadcast of the Super Bowl with $2.3 million in revenue, up about $1.7 million over the FOX broadcast from last year. The Olympic broadcast will generate somewhere between $5.5 million and $5.8 million of revenue and it was about $1.7 million in auto ads alone within those numbers.

While the ratings for the Olympics in February were not as robust as we had expected, the revenue we earned was generally consistent with our expectations for this cycle, given the venue and the very significant time zone difference.

As I said, some of the challenges that we noted -- oh, keeping with Olympics for a minute. In total for February, our NBC stations' local and national advertising were up about an aggregate of $4.5 million. However, as would be expected and anticipated, our non-NBC stations were down on local and national revenue by approximately $3 million, as dollars clearly shifted into the Olympic broadcast during the quarter.

Following up again on Q2. Again, auto has started out slower than we had anticipated this year. As we look through the account list, there's not any one big driver. As we've commented in the last 2 quarters, it tends to be what I would describe as broad-based and relatively small to midsized retrenchments up and down the board, with more people taking a little bit of spend off the table than people putting a little bit of spend on to the table. We certainly will keep watching our auto closely as the year progresses.

The communications companies that I mentioned in Q4 continue to reduce spending in Q1 by nearly $1.6 million, which would be national business for us. One account accounts for $1 million of that $1.6 million. McDonald's also continued to spend in network in Q1 and shifted $1.3 million from our stations to the networks. We are encouraged that McDonald's has actually asked for a veil request for second quarter. And so we are cautiously optimistic that some McDonald's spending will return to our stations as we move into Q2.

While it is very early for Q2 sales with less than $50 million of business on books, which would be less than 1/3 of our overall expectations, which would also be perfectly normal this early in February, our Q2 pacing at present is up mid-single-digit, and we find that encouraging.

On a positive note, as you can glean from our Q1 retrans guidance, our gross retrans revenue for the year is going -- is estimated to range between $340 million and $350 million. We will continue to share reverse comp with the networks at approximately 50-50, so we would be expecting net retrans of $170 million to $175 million, which, as Kevin mentioned, is in excess of a 20% increase. Our range is a little wider than usual in this quarter because of the 2 pending negotiations. And by the time we get to the second quarter call, we're -- we'll certainly be happy to tighten up that range.

Our Q1 political estimate of $5 million to $5.5 million is consistent with Q1 '14 on a combined historical basis, and we're looking forward to a strong political revenue year, especially in the fourth quarter of '18, where we anticipate half of the total year spend will hit.

With respect to our Q1 expense guide, keep in mind that our gross retrans revenue is ranging in a $10 million range, and we're sharing reverse comp 50-50. So that naturally would put a $5 million range in our reverse comp number for the quarter. And you should take that into account when you look at the overall range for the quarter.

On a combined historical basis, we're very pleased that our payroll will actually be down in the 2% range quarter-over-quarter. So our -- any increase, generally, in operating expenses and broadcast expenses for Q1, combined historical basis, is essentially being driven by the reverse comp increase, reflecting the very strong growth in the gross number.

Finally, while we can't guarantee the future, we're currently optimistic that when we get to the end of the year and discuss full year results, we're going to be talking about a company that had in excess of $1 billion in revenue in 2018.

I'll turn the call back to Hilton.

Thank you, Jim. In closing, I want to recognize the absolutely outstanding work of our Washington, D.C. news bureau, which we launched approximately 3 years ago. Last fall, the bureau moved into a new facility and expanded its staff to include additional seasoned political reporters. The new news room, studio, technology and especially, news professionals reflect our continued commitment to localism because our D.C. bureau only covers local angles of stories breaking in D.C. rather than duplicating the coverage provided already by the networks.

For example, at the recent State of the Union, our D.C. Bureau produced more than 200 pieces of content exclusively for Gray's local television stations, including interviews with more than 80 members of the Congress and additional members of the administration.

Every shareowner of Gray should be very proud of the work of our talent and professionals, not only in Washington, but across the country in each of our 57 markets. This commitment to putting our best local news products at the end of the day is the key to Gray's success, past, present and future.

Operator, at this time, we ask that you open the line for any questions anyone may have.

(Operator Instructions) And we'll take our first question from Kyle Evans with Stephens.

A little bit of detail, please, on the McDonald's shift. It's unclear to me what kind of economic sensitivity on their part's driving that shift. I just don't understand it, please.

Well, that happens from time to time with large accounts like that, whether it's a McDonald's or you can name them, they -- I can't tell you exactly what their marketing thoughts were, but what we gleaned from the agency was that they -- McDonald's decided they were going to shift money to the network level, or at least that's what we were told, late in December and first quarter. So where exactly they spent that on the networks, I wouldn't know. Things like that will happen from time to time. It's painful when it happens from -- out in the local station level, but it's something you deal with in the business. And as I said, they pulled out in Q1, but they're asking for a veil request in Q2. We were also told that they -- McDonald's pulled money across the board in local, not just Gray. Now again, I can only tell you what the agency told us.

Got you. You're still in negotiations with 2 large MVPDs. And in the past, some of your peers have seen ad spend fall off when they've blacked out. Or -- how are those? Are those tracking fairly friendly? And is there any overlap in the spend decline in communications.

No. Actually, not really. There was probably a little bit of that in December, which would have been normal, but nothing dramatic. The large communications company that I mentioned that dropped out actually isn't in the -- wasn't on the list of negotiations this year. And again, we -- our sense is that over the past year or 2, they had been targeting mid to smaller markets and have now shifted their focus a little bit back to larger markets. And again, it's unfortunate for us, but it's an ebb and flow type of thing, where some of that will come around at some point in the future. If you recall, on the third quarter call, I mentioned that there were a couple of communications companies that were spending significantly more, and that was actually helping to drive our national up during 2017. The good news there is, that at least in Q1, those companies are still spending at basically the same levels they were doing in '17. So while they didn't up going into '18, we're -- at least for Q1, we're seeing the same heavy spending level that they were putting out in '17. So we're -- again, we're encouraged by that.

What does the supply side of M&A pipeline look like right now?

Kyle, it's Kevin. Because there's really been no transactions in the last year or so, it's pretty much the same supply -- the same stations on that target list that were on the target list a year ago and 2 years ago. As I said, we're not going to comment on any specific conversations, except to say we're talking with lots of people and we're not prepared to overpay. And we are only looking at stations that meet our criteria. So it's kind of -- we're having the same level of conversations as before. And when we have something to announce, obviously, you all will be the first to know.

Are those groups, smaller onesie-twosies, or a mix of both?

We're talking to people in all size, types of stations and transactions.

And we'll take our next question from Aaron Watts with Deutsche Bank.

Jim, just wanted to be clear. So could you again go over what auto was up or down in the fourth quarter? And then what you're seeing in the first quarter?

Auto was down... Just a minute. Auto was down mid-single digit in fourth quarter, and that appears to be continuing in first quarter. Not quite at the same level, but in the mid-single-digit range. And again, in both quarters, there's no one big driver. You've got some accounts that are increasing, some accounts that are decreasing. And as you go through literally the thousands of accounts that we have on -- in a quarter in the auto category, what it is ultimately is that there's, as I said, there is, on whole, more people taking a little bit off the table than people putting a little bit on the table. And as we commented the last couple of calls, we think in part that may be, especially on the local dealer side, some people readjusting their business models, maybe, adjusting to expected sell rates, et cetera. So we'll keep our eye on it. Personally, I'd love to be able to say it was X, Y and Z that pulled out $4 million because it went to -- and I'm making the number up, but because it went to network, right? That makes an easy explanation. Here, it's more broad based, but nothing that I would describe as alarming.

Okay. And are you tempering your expectations for the full year just based on expectations of auto sales slowing down from what we've seen the last couple of years?

Right now, I don't think totally tamping down on our experimentations for auto. Clearly, first quarter has started out slow for us. We still think it probably will pick up a little bit. And the -- we did start to see auto slow up, I'm trying to think, maybe starting the second half of last year, call it Q3. So I think some of this may start to cycle against each other as we keep moving through '18.

Okay, got it. And then maybe just one other question for me. Obviously observed some pretty market declines in prime time entertainment ratings. Can you just talk about what you're seeing in your local news ratings maybe in the fourth quarter and here to start off 2018?

Again, remember we're in diary markets, so we only get reports 4 times a year under the Nielsen system. And so we measure it in December, and we're measuring now in February; we'll see February results in a couple of weeks. I mean, the overall trend, Aaron, is that our local news across the whole company, local news gets better ratings than prime time programming does. There's -- there are challenges with prime time programming across the board, but there's also challenges with the measuring. And we're not entirely sure at how and when measuring becomes more accurate and more reliable. But what we're seeing is -- what we saw in November was we're certainly doing -- we're not only kind of maintaining our ratings' positions, but we're improving our rating positions over all prior periods. Prime is not doing -- prime is certainly challenging, but the local news is holding up, and our shares are holding up or doing better.

Okay. And Kevin, some of the investments that Nielsen's making in their local market measurement, will that touch into your markets? Or it's still not quite getting there?

Nielsen has been saying for a couple of years they're going to replace the diaries with a number of new methodologies and technologies. And that will be supposedly rolled out this year across all markets.

And we'll take our next question from Leo Kulp with RBC Capital Markets.

Just 2 quick ones. For the MVPD contracts that you're still renewing, what percent of your subscriber base do they represent? And what's currently baked into your retrans guidance for the subscribers? Are you basing it on what you've got from other deals? Or are you taking a more conservative approach?

The 2 negotiations that remain outstanding are larger MVPDs. And we are -- we have an expectation as to where they will land. Retrans and programming contracts in general follow a rule that the biggest guy pays the least, the smallest guy pays the most. And there's a sort of very direct correlation between size and fee. So when we -- our internal guidance on what those 2 will finish at, now it's included in our guidance, is reflective of sort of their size in our overall universe of MVPDs. I can't give you a percentage because -- I can't give out sub numbers. So if I tell you what the combined is for 2 of them, then the other guys, if they're listening to this call, are going to quickly do the math and find out what their competitor has. And we -- so we can't do that.

And we did say before, that when we're done with this round of negotiation including these last 2, we will have reset pricing at about 58% of our entire sub base. Next year, we have about 2% to do. And then our next big year is in, I guess, it'd be in -- early in '20, 2 years out, which will be about nearly 40%.

Got it. And then just a quick question on political. I think you said your 1Q '18 guide is in line with your 1Q '14 combined historical pro forma number. Should we think -- how are you thinking about the 2018 political? Should we think about it kind of being flattish with '14 when you exclude the Alaska race?

We're going to politely decline to put a number out for 2018 political, having learned the painful lesson in 2016. That being said, '14's combined historical total was $142 million and change, almost $143 million. We said there were $20 million to $25 million in Alaska that isn't -- we know isn't returning this year. So you could take it out in that bottom and do the math and it gives you a lower number. I don't -- I'm not commenting on that. I can understand the math. What we do firmly believe is that 2018 political will be very strong, especially where the races are evenly matched, just as we saw in '16 in Senate races or in House races or in Governor's races and in the special election races since then. If the candidates are well matched, we are firmly convinced the money is going to flow. And so as Kevin said, we've got a lot of Senates up, a lot of Governors, probably a couple of good House races. It will remain to be seen exactly who gets matched up well and where the money flows. But overall, at the end of '18, we're pretty confident that we're going to have a good political year. It's kind of a "how big is big" type question.

(Operator Instructions) We will take our next question from Barry Lucas from Gabelli and Company.

Jim, I want to come back to the auto question yet again and maybe extend it to broader categories. But maybe you could talk a little bit about any feedback you've gotten from clients with regard to the impact of tax cuts. I know it's really early and most people have not seen any or just about to see some changes in their take-home pay, but how much of the uncertainty with regard to that improvement do you think is playing into auto or any other significant category?

I mean, I think that's right, Barry, that John Doe and Mary Smith on Main Street in Mid-America haven't really seen that in their pockets yet. And so I think when they see that tax cut money in, that might -- that certainly is going to be a benefit. So -- but you're right in that it's very early and it's just starting to trickle down in just that immediate tax benefit. I think the larger corporate tax benefits are going to take longer to trickle through as well, which would be, in my mind, perfectly natural, right? So I think it's going to take a while, but I think it does speak to later this year or going into next year, that the tone in Mid-America probably picks up a bit.

And we'll take our next question from Dan Kurnos with Benchmark.

Jim, just quick housekeeping, just so we're all on the same page here. Just on the pacings and the outlook here. Are you giving that off of combined historical or as reported?

No. The pacing commentary I made is basically combined historical. The outlook in the guidance with local being up slightly and national flattish to -- slightly down to flat to up slightly is against as reported.

Great. And then, just I know we've talked about some specific players, but it's -- maybe ex McDonald's, just, could you give us some category color outside of auto, just how it performed in Q4 and into Q1?

Yes. I mean, as I said, auto was down. Communications, which we talked about, is down. The entertainment was up a little. Financial sector was up nicely. There were several insurance companies that -- several health care insurance companies that jumped in. They were probably kind of year-end renewal-type activity, more seasonal activity. Home improvements has been strong for more quarters now than I can think of. Legal was up significantly. We had a few local law firms that have been pretty active. Unfortunately, the rest of the usual suspects were down a little. Department, furniture, appliance down, which has been happening now for several quarters and reflects the retail industry woes. Medical was also down a little bit, too. In first quarter, I think it's a little bit better so far in overall tone. Again, auto is still down. Communications, like we talked about, is down. Again, home improvement, legal are nicely positive. And medical was -- is again back into positive territory. Restaurants would be down, again reflecting McDonald's. And furniture, appliances and supermarkets down, too. Supermarket's mostly driven by the Hy-Vee account in our part cutting back a few hundred thousand dollars.

Got it. That's really helpful. And then just one last one for me; Kevin, I don't know if you'll answer. But just kind of high level on the M&A environment, just your thoughts around how it's being impacted by, I guess versus expectations anyway, the delay in the close of the Sinclair-Tribune deal, understanding that you might be players on that. And also given that you guys have top-tier station -- or top-rated stations, it's harder for you to participate in the swaps market, but just how you're thinking about sort of M&A versus swaps, the way that the landscape is shaping up for '18.

All I can say on Sinclair-Tribune is that I can't remember a broadcast transaction that got as much general press as Sinclair-Tribune. I don't have the impression that a lot of people are waiting around for that deal to close, but I guess it's possible some people want to wait to see if that deal closes and how it closes. We're not looking, really, at doing any swaps. As you said, it's difficult for us to justify selling a station that's generally #1 station in order to pick up a #4 station somewhere else. And under the new rules, it's not clear that #1 TV stations can necessarily buy second stations in their markets. So we think -- and the FCC ownership rules provide some common-sense relief. They don't go anywhere as far as we think they should, but it's a welcome first step. I think it does certainly open up a few doors for us, but we're mostly focused on growing the company going into other markets than we are about getting rid of stations that we own so that we could have a stronger presence somewhere else.

(Operator Instructions) We'll take our next question from Marci Ryvicker with Wells Fargo.

I have 2. Jim, you mentioned Q2, I think you said up mid-singles. And I just wanted to know, what kind of visibility do you have? Meaning, how much is booked? And then I'll just ask my second question quickly. It's on retrans rates. There has been some talk among investors that, perhaps, year-end '17 rates that were negotiated may not have met company expectations. So just if you could comment on that, that would be awesome.

I'll take your first question and then I'll let Kevin have the second question. But at this point in February, Marci, we probably got less than -- definitely less than 1/3 business already booked for Q2, which that level is perfectly normal. It would be less than $50 million right now. And that's what we're looking at and seeing in plus mid-single. Now admittedly, it's early and there's a long way to go in the quarter, but we are cautiously encouraged by that. It certainly beats seeing red this early going into Q2.

Retrans. Just generally, our retrans came out better than we had expected going into the season. We still have a long way to go to get parity, but we're in a much better position this year than we were a year ago.

And we'll take our last question from Jim Goss with Barrington Research.

A couple of quick questions. One, I was wondering if the Olympic time zone difference mattered a lot in terms of Olympic dollars in your opinion, given that the next 2 will face the same issue. And then the second question -- okay, go ahead.

I think that -- this is Kevin. I think the time zone did play into it, as well as the fact that, unlike any prior Winter Olympics, you can see everything online, get the results hours before we get broadcast. We didn't -- this month, we also had seen a dominating story in the beginning of the Olympics with Trump and a lot of the conversations about what's happening in Washington with -- sort of around the President, around [Dock]. And then we had that horrible Florida shooting which has dominated the conversation for the second half of the Olympics. And also a really big blockbuster movie, that released in the movie theater by my house has been filling up all 4 parking lots for the last 9 months. Have never seen them use more than the first parking lot. So folks who are going out of their house to watch movies, some folks many times. And dialogue just did not seem to be -- didn't really seem to be as focused on the Olympics as prior Olympics have been. So I don't know how much that is -- has to do with time zone versus sort of other competing -- other things competing for peoples' time over the last 2 weeks. But when we certainly saw that the ratings that were reported publicly were not as impressive as we had seen in Sochi. So all in all, as Jim said, the Olympics came in good for us. They probably could have been a bit better though.

Okay. And I guess this is also for you, Kevin. You indicated you'd look at all size groups in terms of M&A. I'm wondering how large a size deal would be of interest to you. And looking at scale ambitions versus dominance in local markets where you have 40% market share, how do you balance those items?

Jim, this is Hilton. Let me answer that. The answer to it is that we're interested in really any number of scale acquisitions, whether they're large and transformative with the right partner, or with smaller groups, whether they be singles or triples. We hope to grow, but we do wish to stay with the quality portfolio that we have. That's not to say that everything's got to be absolutely the #1 in their market, but the vast majority of things certainly would be helpful. We think it really has proven our business model to be a very successful one. So Gray is quite open to discussions in a number of different capacities.

And it appears there are no further questions at this time. I would like to turn the conference call back over to Hilton for any additional or closing comments.

Thank you very much, Ashley. I just want to thank everyone for joining us today, your interest in our company, your interest in our business, the broadcast business. And I look forward to talking to you soon for our first quarter results. Thank you.

And once again, that concludes today's conference call. We thank you all for your participation, and you may now disconnect.