Sinclair Inc (SBGI) 2016 Q2 法說會逐字稿

Greetings and welcome to the Sinclair Broadcast Group, Incorporated's second-quarter 2016 earnings conference call. At this time all participants are in a listen only mode, and a question-and-answer session will follow the formal presentation.

(Operator Instructions)

As a reminder, this conference is being recorded. I would now like to turn the conference over to your host Mr. David Amy, Vice President and Chief Operating Officer of Sinclair. Thank you, sir, you may begin.

Thank you, operator, and good morning, everyone. Participating on the call with me today are David Smith, President and CEO; Steve Marks and Steve Pruett, Co-Chief Operating Officers of Sinclair's Television Group; Chris Ripley, Chief Financial Officer; and Lucy Rutishauser, Senior Vice President Corporate Finance and Treasurer. Before we begin, Lucy will make our forward-looking statement disclaimer.

Thank you, Dave. Good morning, everyone. Certain matters discussed on this call may include forward-looking statements regarding, among other things, future operating results. Such statements are subject to a number of risks and uncertainties.

Actual results in the future could differ from those described in the forward-looking statements as a result of various important factors. Such factors have been set forth in the Company's most recent reports as filed with the SEC and included in our second-quarter earnings release. The Company undertakes no obligation to update these forward-looking statements.

The Company uses its website as a key source of Company information which can be accessed at www.sbgi.net. In accordance with Reg FD this call is being made available to the public. A webcast replay will be available on our website later today and will remain available until our next quarterly earnings release. Included on the call will be a discussion of non-GAAP financial measures, specifically television broadcast cash flow, EBITDA, free cash flow, and leverage.

These metrics are not meant to replace GAAP measurements, but are provided as supplemental GTL to assist the public in their analysis and valuation of our Company. A reconciliation of the non-GAAP financial measures to the GAAP measures in our financial statements is provided on our website under Investors, Reports and Filings.

Thanks, Lucy. Before we go through the results, let me review some of the more meaningful activities that have taken place since our last earnings call. On the content side, NBC affiliation agreements covering nine markets that expired at the end of 2015 were renewed by us and our JSA partners.

This is in addition to another 13 Fox affiliate markets that we and our partners reached an agreement on through the end of 2019. We also reached an agreement to renew our retrans agreement with Comcast and were able to obtain expanded coverage of Tennis Channel, some of which will occur at the end of this year and some in the future. We are unable to discuss details of the agreement due to nondisclosure provisions. However, we are extremely pleased with the value we obtained in the deal.

In addition, we obtained additional carriage of Tennis Channel to approximately 1 million subscribers through a deal with Charter effective mid-August of 2016. Circa, our millennial and independent-minded focus online news and entertainment offering went live last month. What sets Circa apart is its video rich and atomization that provides for personalized content, and the user response has been spectacular with over 7 million video views in its first week alone, as well as increasing social media shares every day.

We've expanded local news in five markets in advance of the peak political season, and now produce over 2,200 hours per week of local news. For us, not only are we the largest producer of local news in the country, we also wanted to point out the quality of our coverage and how proud we are of our team at WJLA, ABC7 in our nation's capital, that won the prestigious Edward R. Murrow award for excellence in electronic journalism. This is in addition to the 163 news awards we've already received by our other stations in just the first half of this year.

Finally, we are excited to report that our Sinclair Broadcast Diversity Scholarship Fund, established to provide aid to minority students, awarded a combined $43,000 to its inaugural class of nine college students aspiring for a career in broadcast television journalism, and we wish them the best of luck. So now Chris will take you through the second-quarter results.

Thank you, David. For the second quarter we exceeded our guidance in all key financial metrics of revenue, EBITDA, and free cash flow.

Media revenues for the second quarter were $606 million, an increase of 21% or $103 million higher than second quarter 2015 and higher than our guidance. On a pro forma basis, second quarter 2016 media revenues were 12% higher than pro forma second quarter 2015, primarily due to the increase in political advertising, retransmission fees, and digital revenues.

Media operating expenses in the second quarter, defined as media production and media SG&A expenses before barter, were $372 million, up 31% from second quarter last year, and up 17% on a pro forma basis. The increase on a pro forma basis is primarily due to higher reverse retrans fees, production costs on more than -- on over 20 more ASN games produced, and startup costs related to our revenue generating initiatives, as well as news expansions from 2015 and 2016.

Corporate overhead in the quarter was $14 million, flat to the same period last year, primarily due to higher compensation, acquisition, and consulting costs, offset by lower stock-based compensation costs and insurance costs. Research and development costs were only $1 million as ONE Media's work on the development of the ATSC 3.0 transmission standard has mostly been completed, and they now await the implementation and SFN buildout phase. It's important to note that as the FCC works through the approval process of 3.0, last week, South Korea officially announced that their country will adopt it as their official broadcast transmission standard.

EBITDA was $205 million in the quarter, an increase of 11% or $20 million higher than the same period last year, and $3 million higher than our guidance. The EBITDA margin on total revenues was 31% for the quarter.

Net interest expense for the quarter was $54 million, up $6 million versus second quarter last year on acquisition financings. Our weighted average cost of debt for the Company is approximately 5%.

Diluted earnings per share on 96 million weighted average common shares was $0.52 in the quarter, which includes the previously disclosed $9 million one-time FCC settlement which reduced the diluted earnings per share by $0.09. We generated $102 million free cash flow in the quarter and converted over 50% of our EBITDA into free cash during the trailing 12 months ended June 30, 2016.

Our 2016, 2017 free cash flow yield is approximately 19% and our dividend yield is over 2% based on our current share price. With that I'll turn it over to Lucy to take you through the balance sheet and cash flow highlights.

Thank you, Chris. Capital expenditures in the second quarter were $24 million, and we are estimating $95 million to $100 million in CapEx for 2016 as we reprioritize our 2016 and 2017 projects to accelerate the ones with larger ROIs. Cash programming payments were $29 million and we are still on track to meet our full-year estimates of $112 million.

Cash taxes paid in the second quarter were $29 million and for the full year expected to be about 70% to 75% of the tax provision. In July, we completed an amendment and extension of our bank credit facility, extending the full $485 million of revolving commitments and $140 million of Term A loans from April 2018 to a maturity of July 2021, and reducing certain pricing terms on those loans based on satisfying covenant ratios.

At June 30, total debt was $4.179 billion, including $131 million of nonguaranteed and VIE debt. And cash on hand was $104 million. We had $483 million available on our revolver for total liquidity of $587 million.

Total net leverage through the holding Company at quarter end was five times, which excludes the VIE and nonguarantored debt and is net of cash. The first lien indebtedness ratio was 2.1 times on a covenant of four times.

Our 2015, 2016 two-year average net leverage is expected to decline significantly to approximately 4 times by year end, assuming our current portfolio. During the quarter we repaid $19 million of scheduled debt amortization and distributed another $17 million in dividends. For the year, we expect to distribute $140 million of our free cash for dividends and debt repayment.

Since our May 4 earnings release we also repurchased 700,000 shares of common stock for $19 million and now have $86 million remaining on our buyback authorization. And David Amy will now take you through operating performance.

Thank you, Lucy. As Chris pointed out, we exceeded guidance on all key financial metrics. For the second quarter, political revenues were at the high end of our guidance, coming in at almost $17 million and 12% ahead of 2012 pro forma political for the first half of the year.

As mentioned on our last call, our investment in those has been paying off with our share of political dollars growing by 70 basis points from Q2 of 2012 to Q2 of 2016 on a pro forma comparable basis. Meanwhile, core advertising revenues, which excludes political, was up over 1% in the second quarter, in line with our guidance. And digital revenues grew 26% in the second quarter on a pro forma basis.

Now as we turn to our outlook for 2016, for the third quarter we are expecting media revenues to be approximately $649 million to $663 million. That's up 30% to 33% as compared to third quarter of 2015, and this includes $8 million in incremental Olympic revenues which is 30% more than we budgeted, and includes political revenues of $58 million to $68 million.

Pro forma core advertising revenues in the third quarter, excluding political, are expected to be up in the low single digits versus the same period last year. And if we compare to pro forma core advertising in 2012, core is also pacing up by almost 3%.

For the full year, we're estimating political revenues to exceed full-year 2012 pro forma political revenues with the money skewing slightly more towards fourth quarter than historically placed. This is predominately due to the late fundraising by the Trump campaign. Again, we expect a record year in political dollars by beating 2012's $255 million.

On the expense side, we are forecasting media expenses in the third quarter to be approximately $376 million versus $293 million in the third quarter of 2015, with about half of the increase coming from new acquisitions and initiatives, the rest in reverse and regular.

For the year, pro forma 2016 media expenses are forecasted at $1.477 billion versus 2015 pro forma media expenses of $1.261 billion. That's a 17% increase. Of that, 25% of the increase is from acquisitions and initiatives, and the remainder is from higher reverse retrans and normal operating expenses.

Normal operating expenses are expected to be up 5% for the year and that's primarily on the higher sales commission expense on the higher revenues and salary compensation. The 5% increase in normal operating expenses is consistent with our previous guidance.

For the year, corporate overhead is estimated to be up 3%, excluding stock-based compensation. Increases are primarily due to higher compensation and legal and consulting fees related to acquisitions and a spectrum auction. EBITDA in the third quarter is expected to be approximately $243 million to $256 million. That's up 42% to 49% versus as reported third quarter 2015 EBITDA of $172 million, up 36% to 43% versus pro forma third quarter 2015 EBITDA of $178 million.

Free cash flow in the third quarter is expected to be approximately $122 million to $135 million and we are reconfirming our combined free cash flow guidance for 2016 and 2017 of approximately $975 million to $1.050 billion, averaging $5.36 per share per year. And so with that I'd like to open it up for questions.

(Operator Instructions)

Aaron Watts, Deutsche Bank.

Morning everyone, and thanks for taking my questions.

Dave, I think you said that in the third quarter you're expecting pro forma core ad revenues to be up low single digits year over year. How does that compare with how the second quarter played out for you? And would those metrics change at all if you were -- or change materially if you were focusing specifically on TV?

I'll take it.

Third quarter is pretty much pacing very similar to second quarter. We were up low single digits in second, we're looking at the same in third. In second quarter the automotive category showed once again gains, low single digits. And interestingly enough, in third quarter our current pace on the automotive category is the best quarter to date in 2016. So with that said, the big category being automotive, plus in second quarter, plus in third quarter, I think it's pretty stable and the numbers have been very consistent.

That's helpful, David.

And that's actually a good segue into one other question I had on auto. As sales seems to plateau right now, do you see that as a good thing or bad thing in terms of the category and money coming in to you, going forward?

I think it's -- this is Steve Pruett.

As the SARs levels off and, as it has done historically, starts to roller coaster a little bit, the competition within the dealer groups to get local market share stays fairly intense. It can be counterintuitive as well -- as it can go up when SARs go up, it can goes up when SARs goes down, as long as it's not a crash. But I think where we are is a very healthy sort of oscillation around a strong SARs number overall.

Yes, I just wanted to add to your question here in terms of advertising, core advertising, et cetera. The core advertising focus is consistent in terms of just the performance that we're seeing in the base of our business. And part of that conversation we had earlier in the script was about a comparison of 2016 versus 2012 in regards to core; and you saw that we, on a pro forma basis, were actually up 3% on the core side in regards to ex-political. So I think that's important.

We've talked in the past about retrans and the stability of retrans and the recession-proof value that retrans brings to the table. We talked about our digital line, and the growth that we're seeing in digital is way beyond what our peers are experiencing. So just those elements alone show you the stability in our core business, our retrans business, the growth in our digital, and the opportunities that we see coming in other areas, whether it's our multi-cast or what have you, where we're seeing additional revenues start to grow and contribute to our top line.

Okay, great. Thank you.

Marci Ryvicker, Wells Fargo.

The third-quarter revenue guide was nicely ahead of us, and I think the rest of the Street, so I'm going to ask you how much of that is due to M&A or the Tennis Channel?

So Marci, the numbers that we talk about core advertising -- those are pro forma numbers. So it's already on a comparable basis.

Okay, so is there -- in the total, not just the core advertising, but the total media revenue number?

For the as reported?

For your guide for the third quarter

Right. So we really haven't done a lot of acquisitions over the past 12 months. So most of that is really going to come from -- the growth is really going to come from the things that Dave just talked about: growth in retrans, growth in digital, growth in core.

Great. And then, for political, you said -- and in the press release also -- that there is going to be a higher percentage falling in the fourth quarter versus the third quarter. Can you remind us how much of the full-year political had historically fallen in the third quarter? And then just talk about how you manage inventory in the fourth quarter if political is going to take up a larger percentage?

In terms of the inventory question, Marci, it affects roughly nine markets, roughly. And in most of these markets we enjoy more than one property. So as some advertisers get squeezed out on a primary channel because of political, they could go to one of our secondary channels to keep their advertising in place. So I think from an inventory standpoint, realistically it affects maybe 10% of our resume in totality. And we've gone through this so many years in Ohio, and so on and so forth, and in Florida. We're prepared.

Yes, Marci. I'll take the next one.

So historically, we've done about 59% of the full-year political in the fourth quarter. And our guidance that we put out today would reflect more like 61%, 62%. So not a lot of shift there.

Great. Thank you.

Thank you.

Dan Kurnos, The Benchmark Company.

Great, thanks. Good morning. Just a couple.

I guess I'll skip away from core, then, and ask -- just on digital up so strongly, can you just talk about some of the levers there? Whether you're seeing CPM increases? Or whether it's volume? And then on Circa -- I know it's relatively new, but can you talk about a thought on spend and increasing penetration and the longer-tailed distribution strategy?

On the digital growth, it's a combination of things. The core digital is still growing, which is our sites and our visits and we've increased page views. We've increased the kind of display products. But as we've organized our agency Compulse and also developed many more digital marketing products, we're seeing substantial growth in SEM, SEO, retargeting, and just pure play digital marketing packages. So we're seeing some real good results in that area.

And just to add on to that, I would say that it's really more volume growth than pricing growth on digital. And that's because of the investments we've made in our CMS and our VMS. And then, as Steve said we're having good success in our agency services, which we spend a lot of time perfecting and specializing for various sectors.

On Circa we're very encouraged. As David had mentioned earlier, it's gotten off to a fabulous start. Two weeks in, so it's early. But we've seen excellent engagement and traffic and video views in the first two weeks. In fact, competitive with established brands like Vice and Vox and Newsy right out of the gate with little to no promotion. So we're very excited about the strategy there, and the type of content that's being produced is very cutting edge. In terms of the financials, there isn't going to be any substantial revenue to speak of for Circa this year, and we expect to lose probably a little less than $8 million in the first year here getting it launched.

Great, that's helpful.

And then just on the reverse side, you know we saw the press release, and then obviously you commented on it today. It seems like deals are being done kind of reverse -- on a four year basis have been more recent, although I think last time you guys did a CBS deal and did some of your forward stations with CBS at the time. So just thoughts on how much is left on Fox, and is there any reason not to have done all of that upfront now?

On Fox, we just did a group of stations and we have a much larger group that comes up in a couple of years. So most of our deals have been five years or five-year-four deals. Fox ended up being a little bit different. Fox has always been a little bit different. And is so it just really is a case-by-case basis depending on what network that you're dealing with.

All right, great. Thanks guys.

Kyle Evans, Stephens.

Thanks. Could you give presidential contribution to that 2012 pro forma political ad revenue number?

We don't [have it] because of all the acquisitions -- that level of detail. Although I'll say that historically we've run about 50% candidate and then 50% for PAC and issue combined.

Okay. No rough [snatch] for how that 50% candidate shakes out presidential, though?

We're running -- right now we're pacing pretty close to that.

Okay. And then, an update, please, on your retransmission subscriber counts? That's historically been stable to flat to --?

Yes, so that's -- they're still stable.

Okay. And then any commentary lastly on Tennis contributions in Q2 as we try to work on our media segments?

Q2 Tennis contributions was actually a small loss, given that, that quarter is when they have two majors. So there's a lot of productions that's going to happen in Q2 for Tennis. And we haven't really reaped any of the benefits of the additional distribution that we've signed up.

Okay. Thank you.

James Dix, Wedbush Securities.

Thanks very much.

Just wanted to confirm whether, when you're talking about core advertising, you're including your digital as well? Even though you do break out a separate digital growth number, I just wanted to make sure when you're talking about core you are including digital. And then, I guess just any thoughts on your use of free cash flows, (inaudible), press reports, you are interest in another cable network potentially. Just as you are looking at the landscape out there, where do you see the opportunities for using your free cash flow for acquisitions as opposed to capital return? Thanks.

On the core numbers, that does include digital, since it is very much an integrated sale, so we view it as one and the same. Although I'll say that if you were to strip it out it doesn't change the trend lines. And on your question around uses of free cash flow, we optimize uses of free cash flow based on returns. And we look at buying back our shares versus doing more core acquisitions and versus adjacencies, and we balance that off versus the returns we can get in each one of those areas. So we've always been an acquisitive Company, and every time we do an acquisition we have the utmost confidence that it would be accretive versus just buying back our shares.

But that's something we're always monitoring, and certainly I think we think we're very cheap right now, especially with this downdraft. And so I think it's something we're going to have to balance going forward as we look to produce a lot of free cash flow in the near future.

Great. Thanks very much.

Davis Hebert, Wells Fargo Securities.

Good morning everyone. Thanks for taking the questions.

I wanted to ask a question on some of the non-broadcast businesses: Compulse, Burst, et cetera. Can you provide any sense of how EBITDA contribution from those businesses might look for next year?

So those two entities are not really material EBITDA contributors. You're asking about Compulse and Burst, correct?

Correct.

Burst is a minority investment. We are rolling it out and testing it in our stations. We've gotten good results back in terms of increasing our engagement with our consumers, and making it easier for them to submit UGC to us. So the benefits of that I think will start to flow through our news operations next year. And whether there's ultimately a return on the equity investment, that'll be into the future and necessarily won't have an EBITDA impact.

Compulse's revenue and top lines are growing quickly. That's our agency business. We've always had agency business; it was just recently rebranded Compulse, so it's not necessarily something new, it's just a rebrand. But the EBITDA from that -- there is EBITDA from that, but it's not really material on the scale of the totality of Sinclair.

Got it. Okay, that's helpful, thank you.

And then, on political, if you could, Lucy, perhaps give a Q3 2012 pro forma number just so we can see how you are tracking against that from the last presidential election?

Yes, so we were -- Q3 -- just a second. We did roughly $75 million pro forma.

Okay, that's helpful.

Yes, so again a little bit -- Q3 at our $58 million, $68 million guidance for this year will get pushed. We're running ahead first half of this year; we got some delayed Trump spending. Q4 should pick all back up so that we have record-breaking year for the whole year up against 2012.

Okay got it. And then last question for me.

On the balance sheet you called out the four times leverage; it was just a tad higher than the 3.9. With your Q3 looking good, just kind of curious the mechanics behind the slight increase there? And any thoughts around balance sheet refinancings?

I think you have a couple of bonds that are going to be callable. I'm just curious if you're looking at being opportunistic in the high yield market any time soon?

The four times is an average number, it's a rounded number. So it's really not a lot of change there. We did close Lincoln in the second quarter, that station. And on the bond side we're certainly keeping an eye on both the 5 3/8% bonds, which became callable in April, as well as the 6 3/8%, which become callable this fall. Especially right now with some of the flight to safety that we're seeing, so we're keeping a close eye on both of those issues. And if there is an opportunity to refi with a new bond or bank debt, again at an attractive interest rate that would be NPV positive, then we would look at that. But it's got to make economical sense for us.

Okay, so there's no covenants in those bonds that you'd like to see perhaps a little wider or looser? It's more economics-driven then?

Yes, it's economics-based. We certainly -- given when these bonds were done; the Company is a different Company now, and we would need to resize things and restructure it so that it's more compatible with the Company that we are today. But anything we would do there would really be economical.

Okay. Thank you.

Tracy Young, Evercore ISI.

I have got three questions.

The first just relates to the Fox reverse retrans. Are those numbers in your current guidance for the year? Or is that something that starts at the end of the year?

They've been in there actually, Tracy, for the whole year. So all the guidance we've given you every quarter, we had already had estimates in there for them.

Okay, great. And then you did mention the Tennis Channel in Q2 is running at a loss. Are you expecting it to have breakeven or grow in Q3 EBITDA?

Yes, the Q2 is seasonally the worst quarter for Tennis. So it should be a small positive contributor for the rest of the year. And for 2017 we're very confident in our run rate projections of $60 million-plus, and get good growth there after. So all good on the Tennis Channel.

Okay, great. And then the last question is related to ATSC. Good to hear that South Korea wants to adopt it. Any more color in terms of timing that you can provide on the FCC?

Yes, I think what I saw recently in the trades was the Association of Registered Professional Engineers, they practiced before the FCC came out recently and issued a statement saying that the FCC should adopt [to it] as soon as possible. So I think you're going to see this move through the regulatory process at a fairly quick pace. And I think the fact that South Korea has now adopted it as their standard for broadcast -- the US has already adopted it, and I think you're going to see it over time become likely the global standard. The long term consequence of that is a function of our intellectual property. It's going to be very interesting to watch.

Okay, thank you very much.

Leo Kulp, RBC Capital Markets.

Thank you. Good morning and thanks for taking the questions. I just had three quick ones.

First, can you provide an update to your guidance around net retrans, given some of the moving parts this quarter?

Yes, we are still expecting high teens for net retrans this year. Low teens next year, and single digits in 2018. And again, the trend there is not related to anything other than just timing of when the MVPD contracts come up versus the affiliation agreements.

Got it. Thank you.

And then second, as far as the full-year political outlook -- and I apologize if I missed this -- but can you provide an update to your outlook? I think last quarter you said you were expecting about $270 million to $280 million for the year?

Yes, so the full-year guide is $260 million to $280 million. That's really based on how historical numbers have trended in. Again, it's still way too early to really get a feel for where we're going to be. So again, the thing to take away from this is that we expect to beat the 2012 $255 million. This will be a record-breaking year for us.

Got it. Thank you.

And then finally, when you're thinking about M&A, and specifically around cable networks, how do you think about how Sinclair can add value by acquiring another cable network beyond the Tennis Channel? Where is the value creation there if you were to do another cable network acquisition?

So we have created a tremendous amount of value already in a very short period of time on Tennis. It's more than exceeded anything that we could have hoped for in terms of success in our thesis of increasing distribution. What was an asset, a gentleman asset that had great content that was being undervalued in the marketplace and just needed some leverage to unlock it. And so far we've gotten through -- and most recently just with Comcast now, and increased distribution with every one of the major MVPDs. So that's an obvious example of how we can bring value to the table -- a substantial amount of value. And as I've said before, I think when all is said and done with Tennis, it's going to look like a two to three times sort of deal. It will take some time to get there, but I have no doubt in my mind we'll get there.

And we will look at everything that comes across our table, if you will, and things that don't even come across our table, we search everything out. So it's not like there is a lot of other opportunities in cable that we think warrant our effort and attention. And they really -- you need to have a unique set of characteristics that existed within Tennis. That's what we've publicly said that it's not our stated goal to continue to buy cable channels. But if we get a set up like we had with Tennis, where we can either increase distribution or enhance the distribution outlook of a channel, that can obviously create a tremendous amount of value as we have proven with Tennis Channel.

Got it. Thank you very much.

Barry Lucas, Gabelli & Company.

Thanks very much.

I just have two, and one, it would be if we could drill down a bit in auto and look at the reports, specifically from certain manufacturers, where sales were below planned, can you square the circle there and indicate whether or not one of the big three, Ford in particular, Nissan, some other, had some shortfalls? Maybe if you could just talk about what you're seeing in those general areas? And are those companies that are below plan on sales, are you seeing them come back to the screen to drive traffic?

Money moves around the auto industry flag by flag. It moves with a lot of velocity, and they do things to adapt to the market very suddenly. Now we have seen some money in certain brands, Ford in particular -- very small amount of their budget, by the way, which is the co-op side, the manufacturer co-op sid --, get emphasis for search and also some money that was put -- what we call put on the hood. So we have a group of senior managers here that meet constantly with dealer owners, dealer associations, the agencies for dealer associations, and large dealer groups, as well as manufacturers' representatives. So we like to take those situations and turn them into opportunities.

If we started going through each and every move that a flag makes, I'm sitting here looking at 13 flags; all have different moves. I would say that generally speaking, the result is, there is no particular what I would call material leaning that's any different than it has been for the last year. We did see, on a market by market basis, some people who tested going without mass media come back to mass media. And we've done some research in that area. We actually have some studies we've done with other broadcasters. They talk about why mass media is effective and why in particular, I think as Chris alluded to earlier, we see mass media and digital marketing working hand in hand to create an integrated sale. And we've evolved over time. We've educated our teams over time, and I would say that we are materially changing the level of conversation we have with auto dealers.

Great. Thanks for that color.

And maybe bigger picture, when we think about the post-auction period and what may be available for sale in the way of TV stations, just wondering how you would handicap the probability or likelihood of a change in ownership regulation expansion of the cap?

So we're not optimistic about a change from the FCC in terms of ownership rules. The quadrennial review is underway and an expedited fashion what the preview of the rules looks virtually unchanged. So we don't expect any changes from the FCC. We have been and we are continuing to be focused on the Hill: Congress and Senate. And we were successful last year in getting GSA relief, and that's where we're spending a lot of our time and surgically going after relief. Specifically our next target is the cap. And if there is going to be a change I think it will be through Congress, it won't be from the FCC.

And just a follow-on to that, Barry. As Chris said, we would spend a lot of time with the key members of the House, and more importantly the Senate, both parties. We're right at the top of the echelon, and I think I can say with some degree of comfort that every time we meet with them, their typical response is, we need to fix this. This is obviously a mistake. Tell us when you want us to do it, how can we help you, whatever. I think there's a broad sense that the broadcast industry is grossly over-regulated and the rules need to be thrown aside. So I think once the election is over, regardless of who's in office, we're going to go back at it and I think there's a chance next year you may see something happen.

Great. Thanks for that, David. Appreciate it.

This does conclude our question and answer session. I would like to turn the conference back over to Management for any closing remarks.

Thank you, Operator, and thank you everyone for participating on our earnings call this morning. And if anyone has additional questions, please feel free to contact us.

Ladies and gentlemen, this does conclude our teleconference for today. We thank you for your time and participation, and you may disconnect your lines at this time. Have a wonderful rest of the day.