Craig Huber

Craig Huber of Huber Research Partners questioned the significant year-over-year expense growth in the Scores segment and asked for FICO's estimated market share in auto, credit card, and non-conforming mortgage loans.

Answer

CEO Will Lansing and CFO Steve Weber attributed the expense increase to higher cost of goods in the growing B2C business, increased headcount for innovation, and marketing investments. Regarding market share, they cited third-party analysis placing it in the mid-to-high 90% range for those categories.

Craig Huber asked about S&P Global's long-standing enterprise-wide contracts versus a per-seat model, and how this competitive moat protects the company against AI potentially displacing white-collar workers and impacting payments to data providers.

Answer

Martina Cheung, President and CEO, explained that the enterprise subscription models protect against volatility in headcount and market fluctuations. She emphasized the company's focus on enhancing product quality and usability, leveraging AI and agentic workflows to help clients achieve efficiency, and maintaining high levels of customer engagement to ensure value realization.

Craig Huber asked about the competitive moat provided by S&P Global's enterprise-wide contracts (versus a per-seat model) in the context of AI potentially displacing white-collar workers and impacting payments to data providers.

Answer

Martina Cheung, President and CEO, stated that enterprise subscription models protect against volatility. She emphasized S&P Global's focus on adding quality and usability to products, including AI capabilities and agentic workflows, to help clients be efficient. The strategy is to create value, be proactive with customers on AI benefits, and focus on higher engagement and the best customer experience.

Craig Huber shifted focus to the sales force, asking about the level of investment in sales quality and quantity across the segments and which division is receiving the most focus.

Answer

President & CEO Martina Cheung responded that the company is enhancing capabilities for quota carriers across all divisions with new tools, including GenAI integrated into the CRM. She emphasized a focus on consistent metrics and talent development but did not quantify the investment or single out one division, noting the approach is broad-based while the Chief Client Office team remains intentionally small and focused.

Craig Huber asked about the level of investment in the sales force across the five segments, questioning if spending on the quality and quantity of salespeople is materially different this year and which segment is receiving the most focus.

Answer

President & CEO Martina Cheung responded that the company is enhancing capabilities for quota carriers and support teams across all divisions, integrating GenAI tools and improving metric tracking. While not quantifying the size externally, she confirmed they track capacity and make appropriate investments across divisions and regions. She also noted the Chief Client Office (CCO) remains a small, specialized team.

Craig Huber pressed for more detail on the 'why now' of the Mobility spin-off, questioning what changed given the business was previously described as a core asset.

Answer

CEO Martina Cheung reiterated that the decision was the result of a deep and rigorous analysis over a considerable period. She described Mobility as a 'phenomenal business' but emphasized that a tax-free spin is the optimal structure to create long-term shareholder value, allowing both the separated Mobility company and the remaining S&P Global to pursue their distinct, focused growth strategies.

Craig Huber of Huber Research Partners, LLC asked for a flavor of the customer sentiment President and CEO Martina Cheung has gathered in her meetings, especially regarding optimism and potential policy changes.

Answer

President and CEO Martina Cheung noted that sentiment differs by region, with more optimism in U.S. private markets and for M&A, compared to a more neutral outlook in Europe and Asia. She stressed that every conversation is an opportunity to help clients navigate their environment by providing them with valuable data and research.

Craig Huber asked incoming CEO Martina Cheung what she plans to do differently to enhance shareholder value as she takes leadership of the company.

Answer

Incoming President and CEO Martina Cheung highlighted two new strategic functions designed to drive value. The first is the Chief Client Officer role, which will create a scaled capability for strategic account management and connect opportunities across divisions. The second is the Enterprise Data Office, which will focus on harnessing the company's vast data estate to create new pathways for growth.

Craig Huber asked about MSCI's competitive moat against new entrants leveraging AI, addressing concerns that AI could be a net negative for information service companies by allowing new competitors to gain significant market share.

Answer

Henry Fernandez (Chairman and CEO, MSCI) addressed AI as a competitive threat by emphasizing MSCI's strong competitive moat: proprietary, accurate, trusted, and branded data (e.g., $50T client assets on analytics platform, $15T private assets on servers). He argued that clients require reliable, branded products for critical investment decisions, creating high barriers to entry for new, unproven AI-driven solutions.

Craig Huber questioned the prevailing investor sentiment that AI could be a net negative for MSCI by enabling new entrants to capture significant market share, asking for more detail on MSCI's competitive moat across its major business verticals.

Answer

Henry Fernandez, Chairman and CEO, MSCI, addressed concerns by segmenting the business into data capture, model application, and content distribution. He emphasized that MSCI is not a traditional workflow software provider, and AI can help clients access content. He highlighted MSCI's proprietary and trusted data, including client data from over $50 trillion in assets on its analytics platform and $15 trillion in private asset portfolios, which acts as a significant barrier to entry. He stressed that clients require accurate, thoroughly vetted, and branded products, not just generic large language model outputs, reinforcing MSCI's strong competitive moat.

Craig Huber asked about the factors that would determine whether annual expenses land at the high or low end of the guidance range, and what stock market assumptions underpin the current forecast.

Answer

CFO Andrew Wiechmann clarified that the expense guidance range is unchanged. He explained that if current, higher AUM levels persist for the rest of the year, expenses would likely land towards the middle of the range. This is just one of several factors, including business performance, FX movements, and other expense variations, that influence the final outcome.

Craig Huber requested a breakdown of the ESG segment's year-over-year growth rate by region and asked about the revenue growth of the climate-specific portion.

Answer

Chief Financial Officer Andrew Wiechmann provided a regional breakdown for Sustainability and Climate subscription run rate growth: 14% in EMEA, 4% in the Americas, and 8.5% in APAC. He also stated that the climate-related run rate within the segment is approximately $75-76 million.

Craig Huber asked for concrete examples of how Artificial Intelligence can drive cost efficiencies and revenue through enhanced products, and whether it could lead to greater pricing power.

Answer

President & COO C. Pettit provided examples of AI-driven efficiencies in data operations and software engineering. For revenue, he pointed to products like AI Analytics Insights and thematic discovery tools for Index. Pettit suggested that while the jury is still out on direct pricing power, AI serves as a massive innovation engine that creates more valuable products, which in turn should drive sales and growth.

Craig Huber questioned the persistent cautious tone regarding the operating environment, given the strong stock market, better inflation data, and improved economic outlook.

Answer

Chairman and CEO Henry Fernandez acknowledged the question's insight, agreeing there might be an overemphasis on weaker areas. He pointed out that while the asset-based fee business and sales to segments like hedge funds are setting records, the softness is concentrated in the large active asset manager segment and ESG. He stated that the company calls 'a spade a spade' but is cautiously optimistic that the active manager segment will recover in 2025.

Craig Huber asked Rob Fauber to address the investor perception that AI is detrimental to Moody's business, focusing on the company's moats and potential new entrants, and also inquired about the drivers behind better-than-expected debt issuance this year.

Answer

Rob Fauber, President and Chief Executive Officer of Moody's Corporation, strongly refuted the idea that AI is bad for business, emphasizing Moody's massive proprietary data and analytics estate, anchored by unique rating content and curated data like Orbis. He views AI as an 'unlock' to democratize access to content, open new monetization channels, and generate unique insights. Noémie Heuland, CFO, added that Q4 implied guidance for MIS is consistent with earlier expectations. Fauber attributed improved issuance to market comfort, tight spreads, a pickup in M&A activity, and business investment, despite earlier volatility.

Craig Huber asked about the net impact of AI on Moody's business, focusing on competitive moats and potential new entrants, and what factors led to better-than-expected debt issuance this year.

Answer

Rob Fauber, President and Chief Executive Officer, asserted that AI is an "unlock" opportunity, citing Moody's massive proprietary data and analytics estate (ratings, Orbis, RDC, AI-curated news) and unique IP (actuarial/catastrophe models) as strong moats. He explained AI democratizes access to content, opening new monetization channels. For issuance, he attributed strength to market comfort, tight spreads, and a pickup in M&A activity, which was anticipated to be back-half loaded despite earlier volatility. Noémie Heuland, CFO, added that Q4 implied guidance for MIS is consistent with early-year expectations.

Craig Huber of Huber Research Partners requested more detail on cost containment efforts, including where costs were being reduced across divisions and the outlook for incentive compensation for the year.

Answer

CFO Noemie Heuland explained that the company is executing its Q4 efficiency program, leveraging technology and automation to drive gains in Moody's Analytics and corporate functions. She noted that full-year incentive compensation is now expected to be between $400 million and $425 million, which will affect quarterly margin comparisons as the 2024 accrual was above target.

Craig Huber of Huber Research Partners asked for more details on the private credit market, including its contribution to Ratings revenue and future growth potential. He also requested the specific incentive compensation figures for Q4 and the full year.

Answer

CEO Robert Fauber did not provide a specific revenue percentage but highlighted significant traction, with nearly 400 private credit mandates in 2024 and 30% of first-time mandates in the FIG group being private credit-related. Michael West, President of MIS, described private credit as a clear tailwind. CFO Noemie Heuland provided the incentive comp figures: $507 million for 2024 ($133 million in Q4), with a projection of $420-$440 million for 2025.

Craig Huber asked for an explanation of the significant positive spread between the 70% transaction revenue growth and 51% global issuance growth, and also requested details on incentive compensation.

Answer

CEO Robert Fauber attributed the revenue outperformance to a favorable mix, including strong volumes from infrequent issuers, high-growth in mix-friendly leveraged finance, fees from first-time mandates, and consistent pricing initiatives. CFO Noemie Heuland specified that Q3 incentive compensation was approximately $150 million, with a full-year forecast of $490 million.

Craig Huber asked about the three biggest opportunities for revenue synergies from the Interpublic Group acquisition, specifically mentioning media buying, Flywheel, and Axiom. He also inquired about the current tone of business from clients in the U.S. and Europe compared to three months prior, and asked CFO Phil Angelastro for his thoughts on President Trump's proposal for public companies to report earnings semi-annually.

Answer

CEO John Wren identified media (expected to grow 50-60% larger), healthcare (strong assets and leadership potential), and precision marketing (addressing current challenges) as the top three areas for growth and synergy. He noted that client conversations now include generative AI, and while not euphoric, clients have largely dealt with challenges, with budgets intact and optimism for Q4 project spending. CFO Philip Angelastro stated that Omnicom would evaluate semi-annual reporting if rules change, noting it could align reporting with European competitors, but acknowledged the benefits of quarterly reporting for internal processes and disclosure.

Craig Huber from Huber Research Partners inquired about the top three revenue synergy opportunities from the Omnicom/Interpublic Group of Companies combination, the current tone of business and client sentiment in the U.S. and Europe, and Omnicom's stance on potentially reporting earnings semi-annually if regulatory changes allow.

Answer

CEO John Wren identified media (expected to be 50-60% larger), healthcare (strong assets and leadership potential), and precision marketing (despite recent challenges) as the three biggest initial growth opportunities. He described client conversations as positive, with budgets not slashed and 'green shoots' for Q4 project spending. CFO Philip Angelastro and CEO John Wren stated they would evaluate semi-annual reporting if rules changed, noting the different reporting frequencies of European competitors, while acknowledging the benefits of quarterly discipline.

Craig Huber of Huber Research Partners asked where client cost savings from AI are reinvested, how clients are feeling about tariffs, and which jurisdictions remain for the IPG merger approval.

Answer

Chairman & CEO John Wren and EVP & CTO Paolo Yuvienco argued that AI efficiencies lead to reinvestment in brands and the creation of more personalized content at scale, not a net loss of spending. Wren noted that at a recent major industry conference, tariffs were not a topic of conversation. Executive VP & CFO Philip Angelastro identified the EU as the largest remaining jurisdiction for approval but declined to name the others, reiterating confidence in a second-half closing.

Craig Huber of Huber Research Partners asked for the names of the jurisdictions that have approved the Interpublic deal, whether Omnicom would consider divestitures to secure approval, and for an update on the business tone from automotive and CPG clients amid tariff uncertainty.

Answer

CEO John Wren reiterated a 100% commitment to closing the transaction and does not anticipate needing divestitures. CFO Phil Angelastro identified the approved jurisdictions as China, Colombia, Brazil, Saudi Arabia, and Egypt. Regarding client tone, John Wren noted the tariff situation remains an open question but that Omnicom is protected by multi-year contracts with many auto clients and has limited exposure to CPG.

Craig Huber of Huber Research Partners requested more detail on the potential revenue synergies from the IPG acquisition, beyond the stated cost savings, and whether a growth target exists.

Answer

Chairman and CEO John Wren expressed high confidence in significant revenue upside, citing opportunities from extending Omnicom's media offerings, leveraging IPG's Acxiom data capabilities across Omnicom's client base, and using combined scale to invest more in AI for measurable ROI. He did not provide a specific numerical target.

Craig Huber of Huber Research Partners noted CEO John Wren's repeated use of the word "bullish" and asked for more depth on what is driving this optimism. He also questioned what factors are constraining margin expansion this year despite strong organic growth, and what might change to help margins in the following year.

Answer

CEO John Wren explained his bullishness stems from major new business wins that will fuel 2025 revenue, confidence in the company's competitive tools, and an enhanced ability to measure performance. Regarding margins, Wren noted that winning business requires significant upfront investment in staffing before revenue is recognized. CFO Philip Angelastro added that while strategic investments in AI and platforms are a priority, the company is also pursuing efficiency initiatives like offshoring and automation to drive sustainable, long-term margin growth.

Craig Huber questioned what would change to materially increase VantageScore's market share in nonconforming mortgages, auto, credit card, and P loans, given its historically low penetration (around 5% in non-mortgage, negligible in nonconforming mortgage) despite being available for nearly two decades.

Answer

Mark Begor, Chief Executive Officer, explained that VantageScore was not permissible in conforming mortgages until July, and the FICO price doubling for 2026 creates an unprecedented catalyst for change. For nonconforming mortgages, he noted that lenders often use one system, and the incentive to change was low until FICO's recent aggressive pricing. For non-mortgage verticals, FICO's pricing has been more balanced, but VantageScore still offers a price advantage, which Equifax aims to leverage with free VantageScores.

Craig Huber questioned what would change to materially increase VantageScore's low market share (roughly 5%) in non-mortgage verticals (auto, credit card, P loans) and its negligible share in nonconforming mortgages, given its long presence in the market.

Answer

CEO Mark Begor explained that in mortgage, VantageScore was not allowed until July, and FICO's recent aggressive price doubling creates a new catalyst. For nonconforming mortgages, lenders often used one system, and the incentive to change was low until FICO's recent price hikes. In non-mortgage verticals, FICO has been less aggressive with pricing, so the catalyst is different, but Equifax is offering free VantageScores to drive understanding and adoption, leveraging VantageScore's existing price advantage.

Craig Huber asked for the outlook for the credit card and auto businesses for the second half of the year and how current volume levels in those areas compare to pre-COVID history.

Answer

CFO John Gamble did not provide specific volume levels but stated that auto has been strong and is expected to continue performing well. He noted that the Financial Institutions (FI) business, which includes credit cards, saw nice sequential growth and is expected to have good performance in the second half of the year after a tough Q2 year-over-year comparison.

Craig Huber asked about the forecasting methodology for the non-mortgage business and inquired about specific new products from the Vitality Index that are driving long-term growth.

Answer

CEO Mark Begor and CFO John Gamble explained that non-mortgage forecasts have high visibility from contracts, pricing, and deal pipelines. Begor highlighted key innovations, including combining USIS and EWS data in the cloud for new mortgage and auto solutions, the "One Score" product using alternative data, and the broad use of AI to lift model performance.

Craig Huber of Huber Research Partners asked for examples of exciting new products, particularly outside the U.S. He also inquired about the broad cost outlook for next year, considering savings initiatives and the potential for increased investment spending.

Answer

CEO Mark Begor highlighted several product areas, including international identity and fraud solutions, unique U.S. products combining EWS and USIS data, and advanced scoring models using alternative data. On the cost outlook, Begor and CFO John Gamble noted that benefits from the recent restructuring will flow into 2025, and further savings will come as the remaining cloud migrations complete. They anticipate capital expenditures will continue to decline as a percentage of revenue, with no major step-up in expense-based investment.

Craig Huber asked what environmental changes, beyond AI, are necessary for FactSet to accelerate its organic revenue growth above the 4-5% trend observed over the last six quarters, especially given strong stock market performance.

Answer

Sanoke Viswanathan, CEO, pointed to a continued increase in the use of analytics across the trade, portfolio, and client lifecycles, with AI accelerating this existing trend, driving demand for FactSet's services. Goran Skoko, Chief Revenue Officer, noted that Q4's acceleration from 4.5% to 5.7% occurred without significant market changes, attributing it to maturing products like GenAI, exchange data feeds, price reference data feeds, and managed services. Helen Shan, CFO, added that client tech stack upgrades (cloud migration), the growing need for high-quality, refined data (evidenced by double-digit data ASV growth), and the shift towards managed services for middle office efficiency are key drivers independent of market performance.

Craig Huber questioned what environmental changes, beyond AI, are necessary for FactSet to achieve accelerated organic revenue growth, given the strong stock market performance and the company's consistent 4-5% organic growth trend over the past six quarters. He sought confidence that growth would accelerate above this trend.

Answer

Sanoke Viswanathan, CEO & Director, FactSet, highlighted a continued increase in the use of analytics across the trade, portfolio, and client lifecycles, with AI acting as an accelerant to this existing trend, driving growing demand for FactSet's services. Goran Skoko, EVP & Chief Revenue Officer, FactSet, noted the sequential acceleration to 5.7% in Q4 without market condition changes, attributing it to maturing products like GenAI, exchange data feeds, price reference data feeds, and managed services, indicating that significant market changes are not required for acceleration. Helen Shan, CFO, FactSet, added that client tech stack upgrades, the need for more quality data (reflected in double-digit data ASV growth), and the shift to managed services are key drivers independent of market performance.

Craig Huber asked what environmental changes, beyond AI, are necessary for FactSet to accelerate its organic revenue growth above the 4-5% trend observed over the past six quarters, despite a strong stock market.

Answer

Sanoke Viswanathan, CEO, highlighted a continued increase in the use of analytics across the trade, portfolio, and client lifecycles, with AI acting as an accelerant. Goran Skoko, CRO, noted that Q4 saw significant acceleration from 4.5% to 5.7% without market changes, driven by maturing products like GenAI, exchange data feeds, and managed services. Helen Shan, CFO, added that clients upgrading their tech stacks to the cloud, the increasing need for quality, concorded data (evidenced by double-digit data ASV growth), and the shift towards managed services for middle office efficiency are key drivers independent of market performance.

Craig Huber of Huber Research Partners asked for clarification on adjusted cost growth excluding acquisitions and inquired about the level of investment in the sales force.

Answer

Chief Financial Officer Helen Shan explained that a significant portion of the year-over-year cost increase was due to the normalization of bonus accruals compared to the prior year, along with higher technology expenses. She stated that the sales force headcount is 'relatively flat,' with investments focused on product specialists.

Craig Huber referenced a past multi-year investment program that successfully accelerated revenue growth and asked if the current significant increase in technology spending is expected to produce a similar ramp in organic growth.

Answer

CFO Helen Shan clarified that the current increase in technology spend is not a special, large-scale program like the one initiated in 2019. Instead, it represents a consistent, ongoing investment in technology and GenAI to support the company's existing mid-to-high single-digit growth targets, funded through the rationalization of the existing expense base.

Craig Huber asked for quantification of the expected realized pricing for the fiscal year, especially since revenue is expected to accelerate in the second half against a less beneficial pricing backdrop from lower CPI.

Answer

Chief Financial Officer Helen Shan confirmed the price uplift from CPI will be lower this year. However, she stated that overall price realization is currently flat year-over-year, as lower realization on some new business is being offset by higher volume. She also noted that the company's underlying rate cards have been increased.

Craig Huber of Huber Research Partners, LLC requested a quantification of the expected realized pricing for the current fiscal year compared to the previous year, especially given the expected revenue acceleration in the second half.

Answer

CFO Helen Shan noted that while lower CPI creates a headwind, overall price realization is currently tracking flat compared to last year. She explained that in competitive situations, lower price realization on the rate card is often offset by higher volume. She also mentioned that the company has increased its rate cards, which affects the price realization percentage calculation.

Craig Huber asked for an update on the performance of FactSet's hedge fund and corporate client segments.

Answer

CFO Helen Shan described the hedge fund segment as having a fair amount of churn, where funds may close but then reconstitute, providing new business opportunities. She noted particularly good activity from hedge funds in Asia, especially Singapore. For corporates, she mentioned a strong partnership and an uptick in business, with this segment being a significant source of new logos.

Craig Huber of Huber Research Partners asked for an explanation of the circumstances leading to the non-renewal of the CBS affiliation for the Atlanta station, WANF.

Answer

Chief Legal & Development Officer Kevin Latek explained the change was long-expected, dating to the 1990s CBS/Paramount merger. Gray anticipated this upon acquiring the station and invested heavily to prepare it to operate as a successful independent. Chairman & CEO Hilton Howell added that Gray remains a strong CBS partner, having renewed affiliations in 52 other markets.

Craig Huber asked for an update on the Assembly Atlanta studios, including progress on signing new tenants, the timeline for achieving a return on the investment, and the current occupancy rate.

Answer

Chairman and CEO Hilton Howell reported that 8-9 productions are actively shooting at Assembly, which has only been fully operational since the Hollywood strikes ended. He noted the total investment covers all land, with more monetization to come. CFO Jeff Gignac added that the studio is contributing operationally and is expected to be capital-neutral for the year. Howell estimated the current occupancy rate is around 75-80% of available space.

Craig Huber of Huber Research Partners asked for the total gross and net cost of the Assembly Atlanta project, the expected revenue ramp-up from production, and whether Gray's debt load would preclude it from being a significant participant in M&A if deregulation occurs.

Answer

Chairman and CEO Hilton Howell and CFO Jeff Gignac stated the total cost for Assembly Atlanta is roughly $500 million, with specific numbers available in the 10-K. Howell noted the studios are about 70% occupied with upside potential for more bookings. Regarding M&A, Howell asserted that Gray would be interested in smart, potentially deleveraging transactions like station swaps and that the company has successfully executed acquisitions from a similar position before.

Craig Huber of Huber Research asked about the regulatory outlook under a new administration, the company's long-term leverage target, the potential for further cost-cutting, and the underlying Q4 core advertising growth rate when adjusted for known headwinds.

Answer

Kevin Latek, EVP, expected a deregulatory FCC but noted uncertainty on specifics. Jeff Gignac, EVP & CFO, stated the long-term leverage goal is below 4.0x, likely achievable after the 2026 political cycle, and that the next major cost opportunity lies in affiliate renewals rather than another round of cuts. Gignac found it difficult to quantify the adjusted Q4 core growth but noted the SEC football shift cost a 'few points' of growth.

Craig Huber of Huber Research Partners asked for management's perspective on the recent CBS affiliate non-renewal in Atlanta. He also sought clarification on the outlook for net retransmission margin expansion, including subscriber loss assumptions, and requested a quantification of the Scripps Sports strategy's contribution to Q2 core advertising.

Answer

President and CEO Adam Symson characterized the CBS non-renewal in Atlanta as a 'one-off' situation and reiterated his expectation for net retransmission margin expansion, driven by lower programming fees paid to networks. CFO Jason Combs stated that subscriber churn continues to trend in the 'down mid-single digit' range. Combs also quantified the sports impact, noting a $7 million revenue contribution from the NHL and NBA playoffs in Q2 and a low-single-digit percentage lift to full-year core advertising from its local sports deals.

Craig Huber asked about the sustainability of reduced employee costs in the Scripps Networks division, details on Local Media advertising trends in auto and retail, the potential for more real estate sales, advertising category performance in Scripps Networks, and the year-over-year trend for retransmission subscribers.

Answer

CFO Jason Combs confirmed that the lower employee cost base in Scripps Networks represents a new, sustainable run rate. He detailed that Local Media core revenue was down 3%, with auto and retail as the weakest categories, down low-double-digits and mid-single-digits respectively. He noted no further significant real estate sales are currently queued. For Networks, the flat Q2 guide is supported by strong CTV growth and an improved scatter market, driven by a full slate of sports. Combs also confirmed retransmission subscribers were down mid-single digits, in line with recent trends and forward-looking models.

Craig Huber of Huber Research Partners asked for more detail on broadcast network affiliation negotiations, a breakdown of cost savings at Scripps Networks, and a quantification of Q1 auto advertising performance. He also inquired about advertising category trends at Scripps Networks and the profitability of live sports programming.

Answer

President and CEO Adam Symson declined to elaborate on network negotiations but reiterated that the relationship needs rebalancing. CFO Jason Combs specified that the Scripps News OTA shutdown provides $35 million in annual savings, driving the Networks' margin improvement goal. He noted Q1 auto advertising was trending down in the low-teens range. For Networks, he cited CPG and restaurants as weaker categories. Adam Symson confirmed that live sports programming is significantly more profitable than what it replaced and that future rights deals will be pursued with financial discipline.

Craig Huber of Huber Research Partners, LLC requested a breakdown of cost savings at Scripps Networks, the revenue assumption for the 2025 margin target, management's view on the macro-economy, and details on post-election core advertising pacings.

Answer

CFO Jason Combs reiterated the $35 million annualized savings from Scripps News and noted the 400-600 basis point margin improvement is largely from expenses, declining to give a 2025 revenue assumption. CEO Adam Symson described the macro environment as 'about the same.' Management stated that while sequential improvement in core advertising is expected, year-over-year comparisons remain challenging and they do not provide intra-quarter pacing details.

Requested specific examples of how AI and technology are driving cost savings and asked for the core advertising outlook for the third quarter, including current trends and an expected percentage change.

Answer

AI and technology are used to automate rote tasks like transcription and video editing, not content creation, allowing journalists to be more productive. This also enables building smaller, more efficient 'stations of the future' with lower CapEx and OpEx. For Q3 advertising, the market is soft due to a tough comparison against last year's Olympics and a change in a reseller partnership. While July and August were weak, September is pacing positively. Overall core advertising is expected to be down in the low-double digits to mid-teens range.

Craig Huber from Huber Research Partners LLC asked for specific examples of AI and technology driving cost savings and for the core advertising outlook for the third quarter.

Answer

President & CEO Mike Steib cited AI-driven automation in transcription, video editing, and sales lead generation as key cost-saving measures. CFO Julie Heskett added that Q3 core advertising faces tough comps from the prior year's Olympics and a change in a Premion reseller partnership, projecting a decline in the low-double-digits to mid-teens range, though September is pacing positively.

Craig Huber from Huber Research Partners LLC asked for specific examples of cost savings achieved through AI and technology, and also requested an outlook for core advertising trends in the third quarter.

Answer

President, CEO & Director Mike Steib provided examples of AI use in automating transcription, video editing, and story identification. Senior VP & CFO Julie Heskett added that technology is enabling smaller station footprints with lower CapEx and operating costs. Regarding Q3 advertising, Heskett projected a decline in the low-double to mid-teens range, citing tough comps from the prior year's Olympics and the impact of the Premion reseller change, though she noted September is pacing positively.

Craig Huber of Huber Research Partners LLC asked for specific examples of how TEGNA has utilized AI and technology to achieve cost savings. He also requested an outlook for core advertising trends in the third quarter.

Answer

President, CEO & Director Mike Steib provided examples of using AI to automate rote tasks like transcription and video editing, freeing up journalists for high-value work. Senior VP & CFO Julie Heskett added that technology enables smaller, more efficient 'stations of the future' with lower CapEx and operating costs. For Q3 advertising, Heskett projected a decline in the low-double to mid-teens range, citing tough comps from the prior year's Olympics and the impact of the Premion reseller change, though she noted September is pacing positively.

Craig Huber from Huber Research Partners LLC requested specific examples of how TEGNA has used AI and technology for cost savings. He also asked for the outlook on core advertising trends for the third quarter.

Answer

President, CEO & Director Mike Steib provided examples of AI use in automating rote tasks like interview transcription, video editing, and identifying news stories, emphasizing the focus is on workflow efficiency, not content creation. Senior VP & CFO Julie Heskett added that technology is enabling smaller, more efficient 'stations of the future' with lower CapEx and operating expenses. Regarding the Q3 ad outlook, Heskett projected a decline in the low-double-digits to mid-teens range, citing tough comps from the prior year's Olympics and the impact of the Premion reseller change, though she noted September is pacing positively.

Craig Huber of Huber Research Partners LLC inquired about specific examples of AI and technology driving cost savings and asked for the core advertising outlook for the third quarter.

Answer

President, CEO & Director Mike Steib cited AI use in automating transcription, video editing, and story identification. Senior VP & CFO Julie Heskett added that technology enables smaller station footprints with lower CapEx and operating costs. For Q3, Heskett projected core advertising to be down in the low-double to mid-teens range, citing tough comps from the prior year's Olympics and the impact of a change in a Premion reseller partnership.

Craig Huber from Huber Research Partners LLC asked for specific examples of how TEGNA is using AI and technology to achieve its significant cost savings goals and requested an outlook for core advertising trends in the third quarter.

Answer

President, CEO & Director Mike Steib detailed AI's use in automating tasks like interview transcription and video editing to free up journalists. Senior VP & CFO Julie Heskett added that technology is enabling smaller, more efficient station footprints with lower CapEx and operating costs. Regarding Q3 advertising, Heskett projected a decline in the low-double to mid-teens range, citing tough comps from the prior year's Olympics and the impact of a change in a Premion reseller partnership, though she noted September is pacing positively.

Craig Huber of Huber Research Partners LLC requested specific examples of how TEGNA has used AI and technology to achieve its significant cost savings. He also asked for an outlook on core advertising trends for the third quarter.

Answer

President, CEO & Director Mike Steib provided examples of AI use in automating rote tasks like interview transcription and video editing, clarifying that it's not used for content creation. Senior VP & CFO Julie Heskett added that technology is enabling smaller, more efficient 'stations of the future' with lower CapEx and operating expenses. Regarding Q3 advertising, Heskett projected a decline in the low-double to mid-teens range, citing tough comps from the prior year's Olympics and the impact of a change in a Premion reseller partnership, though she noted September is pacing positively.

Craig Huber inquired about the company's focus on alternative uses of broadcast spectrum, such as ATSC 3.0, asking how much attention the new CEO has given it and what the potential timeline for significant revenue generation might be.

Answer

CEO Mike Steib acknowledged the long-term potential of ATSC 3.0 for delivering a better over-the-air product and creating new revenue streams like data casting, calling it an opportunity with 'substantial optionality.' However, he stated he could not provide a specific timeline for when it might become a significant revenue source and noted that owning the spectrum is the key asset, positioning TEGNA well for the future transition.

Craig Huber asked for updates on Q1 core advertising pacing, trends in the automotive ad category, the timing of 2025 retransmission renewals, and the company's view on regulatory authority over ownership rules.

Answer

CFO Julie Heskett reported that Q1 advertising is pacing down low single digits but would be up slightly when adjusting for the Super Bowl shift. She noted the auto category remains challenged. She also confirmed the majority of 2025 retrans renewals are at year-end. CEO Mike Steib added that the FCC has clear authority on in-market deregulation, but less clarity on the national cap.

Craig Huber asked for a specific growth forecast for Premion in Q4, the outlook for 2025, the new CEO's appetite for digital acquisitions, and the state of post-election TV advertising pacings.

Answer

CFO Julie Heskett declined to provide specific line-item guidance but reiterated that Premion is expected to return to growth in Q4. She noted post-election ad pacing for December looks sequentially better but remains sluggish. CEO Mike Steib expressed a disciplined M&A philosophy, stating any deal must unlock clear cost savings or revenue synergies and deliver cash flow returns.

Craig Huber of Huber Research Partners asked for an updated view on the U.S. economic environment and for the quarterly loss figure for The CW, as well as the outlook for the network's full-year performance.

Answer

EVP & CFO Lee Ann Gliha reported that The CW's losses improved by $21 million year-over-year and reiterated the full-year outlook for a 25% reduction in losses, with profitability expected in 2026. Chairman & CEO Perry A. Sook described the ad environment as performing as expected, stating they have not seen a significant downturn.

Craig Huber asked for commentary on a proposal to cap reverse retransmission fees at 30% and requested quantification of The CW's Q1 losses and its full-year outlook.

Answer

Chairman and CEO Perry Sook dismissed the reverse retrans cap proposal as 'one man's opinion' in an op-ed with little traction in Washington. EVP and CFO Lee Gliha reiterated the full-year outlook for The CW's losses to improve by about 25% versus 2024. She confirmed Q1 losses increased by more than $10 million year-over-year due to programming amortization seasonality, calling it an anomaly.

Craig Huber from Huber Research Partners asked about the revenue ramp timeline for ATSC 3.0, near-term core advertising trends, and the expected timing for The CW to reach breakeven.

Answer

Executive Perry Sook projected that ATSC 3.0 revenue could see a 'step function forward' around 2028 if the proposed transition is approved. CFO Lee Ann Gliha guided Q1 core advertising to be down low-single-digits, an improvement driven by better CW performance, and reiterated that The CW is expected to achieve profitability at some point during 2026.

Craig Huber of Huber Research Partners asked for an update on monetizing alternative uses of broadcast spectrum, the key drivers behind The CW's reduced operating loss, and a more specific look at advertising pacings for the month of December.

Answer

Executive Perry Sook and President & COO Michael Biard indicated significant background work on spectrum monetization (ATSC 3.0) is ongoing, with initial proof-of-concept contracts expected this year, but they are waiting for more substantive developments before making major announcements. Regarding The CW, Mr. Sook and CFO Lee Ann Gliha attributed the improved performance to a combination of major programming cost reductions and new revenue from expanded sports programming. For Q4 advertising, Mr. Sook confirmed December pacings are better (less down) than October and November but declined to provide more granular detail.

Craig Huber of Huber Research asked about the potential for further simplification of News Corp's portfolio over the next 6-12 months, specifically mentioning the real estate segment and the struggling Factiva business.

Answer

CEO Robert Thomson pointed to the Foxtel deal as a prime example of the company's willingness to make significant structural decisions. He acknowledged discussions around Digital Real Estate but noted the current U.S. property market likely undervalues realtor.com. He stated the company is focused on increasing asset value and reducing the discount to intrinsic value for shareholders.

Craig Huber followed up on the company's strategic review, asking if further actions to simplify the company's structure could be expected following the Foxtel sale, while acknowledging the challenging market for a potential Realtor.com transaction.

Answer

CEO Robert Thomson confirmed that the company is 'constantly reviewing the structure' and that the Foxtel deal is 'hard evidence' of this ongoing process. He also defended the value of Realtor.com, highlighting 51% revenue growth in its adjacent businesses and superior user engagement metrics compared to competitors, indicating a high-quality audience.

Craig Huber pressed for an explanation on the year-long delay in material action since the company announced it was exploring ways to optimize its structure, questioning if external factors were causing the hold-up.

Answer

CEO Robert Thomson countered that the company has been active, citing the REA bid for Rightmove and ongoing discussions regarding Foxtel. He reiterated the significant gap between the company's asset value and share price, pointing to multiple 'moving parts' like Dow Jones's growth and the U.S. housing market as factors being considered in their active pursuit of maximizing shareholder value.

Craig Huber questioned the nine-month duration of the strategic review to 'simplify the company,' asking why the process is taking so long, why delays weren't anticipated, and why the review was announced publicly so early.

Answer

Robert Thomson, Chief Executive, responded that the company is 'constantly institutionally introspective' and the process will not continue 'indefinitely.' He noted that significant regulatory work has already been completed and that the process now coincides with the external interest in Foxtel, which must be handled in a 'full and fair manner.'

Craig Huber of Huber Research Partners asked for an update on the company's AI efforts, focusing on the balance between client-facing enhancements and internal cost savings, and whether any AI-driven efficiencies were realized in Q1.

Answer

CFO Ellen Johnson stated that AI-driven cost savings are in the 'early innings,' with AI being integrated into shared services but more benefits to come. CEO Philippe Krakowsky added that on the client side, AI is core to media and data offerings and is being rapidly adopted by creative agencies for strategy, production, and performance tracking, which could open doors to new revenue models.

Craig Huber of Huber Research Partners asked for details on the Q4 organic growth and 2025 outlook for the healthcare, technology, and retail/e-commerce sectors. He also inquired about the annualized run-rate of the $250 million in cost savings and the current 'tone of business' from clients compared to a year ago.

Answer

CEO Philippe Krakowsky noted that results in healthcare and retail are distorted by single large account losses but stated tech/telco has returned to growth. CFO Ellen Johnson confirmed the savings run-rate would be higher than $250 million annually but did not provide a specific figure. Krakowsky described the current business tone as 'pretty solid,' with clients engaged despite some macro uncertainty.

Craig Huber pressed for a specific number on the 2025 net new business headwind and asked for the organic performance of the healthcare and technology sectors, excluding the R/GA and Huge issues.

Answer

CEO Philippe Krakowsky declined to quantify the 2025 headwind, calling the exercise not constructive. Regarding sector performance, he stated that the tech sector has 'found a floor' and is healthier. He explained that the healthcare sector's results were weighed down by a significant client loss from earlier in the year, which the company will begin to cycle past in the coming quarters.

Craig Huber questioned if management still believes in its long-term 5-7% organic growth target and the timeline to achieve it. He then asked why the company would entertain a sale now, and let the process drag on, if they are so confident in achieving that future growth.

Answer

CEO Anthony Jabbour reaffirmed his confidence in reaching the 5-7% organic growth target, suggesting it would not take three years and pointing to the post-migration acceleration in the International business as a positive indicator. He explained the sale process was not initiated by D&B but resulted from inbound interest, which the board has a fiduciary duty to evaluate, leading to a series of interesting conversations that have extended the timeline.

Craig Huber asked for management's opinion on the North American macro environment compared to a year ago and questioned their patience level with the underperforming Credibility and Digital Marketing businesses.

Answer

CEO Anthony Jabbour described the macro environment as largely consistent with the past year, noting a slight lengthening of sales cycles. He stated that the Credibility business saw low single-digit growth. On patience, he emphasized that while they are focused on remediating these businesses, the overwhelming priority is the ongoing strategic process for the entire company, which is consuming significant management attention.

Craig Huber of Huber Research Partners asked for the reasons behind management's increased confidence in reaching the top end of the 5% to 7% midterm revenue guidance. He also followed up by asking what percentage of current revenues are growing at or above the 7% level.

Answer

CEO Anthony Jabbour attributed the confidence to strong momentum in the core engine, with many business lines already at the high end of the range, and progress in addressing underperforming areas like the credibility business. CFO Bryan Hipsher added that the large addressable markets for Third-Party Risk and MDM support this outlook. In response to the follow-up, Bryan Hipsher confirmed that roughly 90% of revenues are growing at or above the 6% level.