Patrick Sholl

Patrick Sholl asked about any overlap between imaging patent licensing for content distributors and the distribution of Dolby Vision and Dolby Atmos content. He also inquired about the process and acceleration of content and service distribution pipeline updates for Dolby Vision 2 adoption by device manufacturers. Finally, he sought clarification on the slightly adjusted three-year growth outlook for Atmos, Vision, and imaging patents, asking if it was due to the law of large numbers, macro views, or trade issues.

Answer

Kevin Yeaman, CEO, clarified that imaging patent licensing is separate from Dolby Vision (which is codec-agnostic) and Dolby Atmos (which uses Dolby Audio codec). Regarding Dolby Vision 2, he noted it's a significant upgrade with strong industry engagement (Hisense, TCL), expecting first TVs by end of 2026 with simultaneous content pipeline work, and faster adoption than the original Dolby Vision due to broad recognition. He attributed the adjusted growth outlook for Atmos, Vision, and imaging patents to the law of large numbers, as these technologies now approach 50% of licensing revenue, while highlighting new growth drivers like automotive, Dolby Vision 2, the video distribution program, and social media support (Instagram, Douyin).

Patrick Sholl asked about the new content distributor model, specifically if there's any technological overlap between imaging patent licensing and the distribution of Dolby Vision and Dolby Atmos content. He also inquired about the rollout process for Dolby Vision 2, including content pipeline updates and device manufacturer adoption, and whether this process is accelerated compared to previous technology rollouts. Finally, he sought clarification on the slight adjustment to the top end of the three-year CAGR outlook for Atmos, Vision, and Imaging Patents, asking if it's due to the law of large numbers or macro trends.

Answer

CEO Kevin Yeaman clarified that Dolby Vision is not dependent on video codecs and is implemented across various codecs, while Dolby Atmos uses the branded Dolby Audio codec, indicating they are separate technologies from the imaging patents. Regarding Dolby Vision 2, Yeaman stated it's a significant upgrade with noticeable differences across TV ranges, leading to strong industry engagement (Hisense and TCL announced support). He expects the first TVs by the end of 2026 and confirmed that content pipeline work is happening concurrently, noting the rollout is faster than the initial Dolby Vision launch due to broad adoption and significant impact. For the growth outlook, Yeaman attributed the adjustment to the law of large numbers, as Atmos, Vision, and Imaging Patents now approach 50% of licensing revenue, making its impact on overall growth more meaningful. He highlighted recent wins like Instagram and Douyin adopting Dolby Vision, and Meta Quest/Samsung Galaxy XR adopting Dolby Atmos/Vision, as key early growth drivers.

Patrick Sholl of Barrington Research Associates inquired about the potential impact of the ATSC 3.0 transition on Dolby Atmos and Vision adoption, and also requested more detail on shipment volume expectations within the Q4 guidance, particularly for consumer electronics.

Answer

CEO Kevin Yeaman stated that the company does not anticipate any impact from the ATSC 3.0 transition, as Dolby's technologies are value-based additions on top of the standard codecs. CFO Robert Park added that while they saw some softness in set-top box and consumer electronics shipments in Q3, the full-year guidance remains within the previously communicated range.

Patrick Sholl of Barrington Research Associates, Inc. questioned the specific vehicle types, such as EVs, driving adoption of Dolby Vision and Atmos in the automotive sector and asked about the tariff exposure for Dolby's products and services segment.

Answer

CEO Kevin Yeaman noted that initial Dolby Vision adoption in auto is led by Chinese EV manufacturers, attributing this to their rapid innovation, investment in in-car entertainment, and designs featuring more screens. CFO Robert Park clarified that the tariff impact on the products and services business is minimal, as most of these products are shipped to non-U.S. markets.

Patrick Sholl from Barrington Research asked about the key variables that could influence the growth of Dolby Atmos, Dolby Vision, and imaging patents, pushing it to the higher or lower end of the target range. He also requested an update on the Dolby Cinema screen base.

Answer

CEO Kevin Yeaman identified the primary growth variables as the pace of adoption and rollout in automotive, the continued expansion of Dolby experiences into mid-range TV lineups, and increased adoption of Dolby Vision capture in mobile devices. Regarding Dolby Cinema, Yeaman noted a modest increase in screens during the quarter and a significant pickup in the investment outlook from exhibitors, who are increasingly focused on premium large format screens as they gain confidence in the 2025 and 2026 box office.

Patrick Sholl asked about the longer-term profitability expectations for Townsquare Interactive, specifically if low to mid-30% margins are sustainable and when further expansion might be expected. He also sought clarification on Townsquare Ignite's performance excluding programmatic headwinds, asking about trends in owned markets versus third-party selling, and the contribution of digital media partnerships to Q3 revenue.

Answer

CEO Bill Wilson stated that Townsquare Interactive is expected to maintain low 30% profit margins for the next 18-24 months due to aggressive sales team investment, with potential for further margin expansion in late 2027-2029. For Townsquare Ignite, Wilson confirmed that excluding the remnant drag, Q3 digital advertising revenue would have increased by 5%. He detailed that owned and operated digital advertising was up 10% in Q3 and year-to-date, while programmatic business grew at high single digits. Wilson explained the significant impact of declining remnant revenue (down 50% year-over-year in Q3) due to AI's effect on search traffic, which led to the revised guidance. He reiterated that digital media partnerships are expected to contribute $6 million in revenue for the year, with strong growth anticipated in 2026 and beyond.

Patrick Sholl asked about the longer-term profitability expectations and margin expansion timeline for Townsquare Interactive, and the performance trends within Townsquare Ignite, specifically differentiating between owned markets and third-party selling, and the impact of remnant programmatic headwinds.

Answer

CEO Bill Wilson stated that Townsquare Interactive's profit margins are expected to remain in the low 30% range for the next 18-24 months, with potential for further expansion in late 2027 and beyond, driven by rebuilt service and sales models. For Townsquare Ignite, Wilson confirmed a +5% growth rate in Q3 2025 excluding the remnant drag. He detailed that owned and operated digital advertising was up 10% (Q3 and YTD), and programmatic was up high single digits. He attributed the overall digital advertising decline to a 50% year-over-year drop in high-margin remnant revenue in Q3 2025, caused by industry-wide search traffic declines due to AI, which significantly impacted guidance. Wilson also highlighted the strong potential of digital media partnerships, projecting $6 million in 2025 revenue and $50 million over five years.

Patrick Sholl inquired if the current search referral traffic headwind is similar in magnitude to past social media algorithm changes. He also asked about the macro environment's effect on Townsquare Interactive (TSI) and the company's confidence in that segment's return to top-line growth.

Answer

CEO Bill Wilson confirmed the search referral headwind is analogous to previous social media algorithm shifts and expects it to plateau and recover over time due to Townsquare's essential role in its local markets. Regarding Townsquare Interactive, Wilson expressed high confidence in a return to revenue growth in 2026, explaining that current muted revenue is a deliberate result of a successful sales force restructuring that has significantly boosted profitability and margins to record levels.

Patrick Sholl of Barrington Research Associates, Inc. asked for details on the media partnership initiative, specifically its potential market penetration at the projected $50 million revenue run rate. He also inquired about how Townsquare Interactive subscribers are navigating macroeconomic uncertainties like tariffs and the resulting impact on subscriber trends.

Answer

CEO Bill Wilson conveyed strong optimism for the media partnership program, stating the addressable market includes 'hundreds and hundreds' of markets outside the top 50, representing a significant growth runway beyond the initial $50 million target. Addressing the macroeconomic climate, Wilson acknowledged a 'significant pause' in April across all business lines due to tariff uncertainty, which impacted Q2 guidance for Townsquare Interactive. However, he noted that business trends improved in May and June, with client confidence returning as the administration signaled a resolution.

Patrick Sholl inquired whether the company's guidance implies an improvement in ex-political growth trends for the radio segment. He also asked how Townsquare is managing its Interactive and Ignite businesses amid economic uncertainty and the potential risk of clients reducing their spending.

Answer

CEO Bill Wilson clarified that the guidance assumes the broadcast segment's ex-political revenue will decline in line with 2024's rate of approximately 6%. He reiterated that the company views broadcast as a mature cash-cow business, with digital serving as the primary growth engine. Wilson stated that despite headlines about economic uncertainty, the digital advertising market remains healthy, and Townsquare is performing well, with past challenges at Townsquare Interactive being mostly 'self-inflicted' rather than purely market-driven. He pointed to strong Q1 profit growth projections for Interactive and improving monthly trends as evidence of the company's current resilience and operational strength.

Patrick Sholl of Barrington Research inquired about the upcoming debt refinancing strategy in light of recent interest rate changes and asked for details on the specific drivers, such as ad formats or inventory, behind the forecasted improvement in National Digital advertising.

Answer

CEO Bill Wilson and CFO Stuart Rosenstein addressed the debt refinancing. Wilson stated the company plans to use a variable-rate bank loan in early 2025, anticipating that interest rates will continue to decline. Rosenstein added that as leverage comes down, they hope to reprice their spread. Regarding National Digital advertising, Wilson attributed the Q4 improvement to strength in social media and video advertising, particularly via their YouTube multichannel platform, as well as a stabilization in core display ads on their websites and mobile apps.

Patrick Sholl of Barrington Research Associates inquired about the advertising categories driving Q3 guidance and asked for a breakdown of growth trends between digital streaming and podcasting within the Digital Audio Group.

Answer

Rich Bressler, President, COO, and CFO, explained that while iHeartMedia doesn't provide forward guidance on specific ad categories, the strong performance of its top 50 advertisers and largest agency groups serves as a positive leading indicator. Chairman and CEO Bob Pittman added that podcasting growth is "roaring," though the company does not break out the specific growth rates versus other digital audio revenue streams. Bressler emphasized viewing the assets' combined impact for advertisers.

Patrick Sholl asked about the adoption of programmatic advertising and its contribution to Premier Networks' revenue, and also inquired whether recent podcasting growth was driven more by increased rates or impression volume.

Answer

CEO Bob Pittman stated that programmatic's contribution to Premier Networks' growth was not yet material, attributing the strength more to national advertiser stability. CFO Rich Bressler added they are expanding broadcast inventory to major DSPs. Regarding podcasting, Bressler confirmed that growth was a result of both higher impression volume and increased rates, driven by their large sales force and diverse content portfolio.

Patrick Sholl inquired about the expected contribution from automated buying to offset political advertising comps and asked for the drivers behind the positive advertising trend in January after a slow end to 2024.

Answer

Chairman and CEO Bob Pittman described automated buying as a gradual, multi-phase rollout aimed at unlocking the value of broadcast radio inventory. President, COO, and CFO Rich Bressler clarified that they do not assume a significant revenue contribution from this initiative in the current year. Regarding January's strength, Bob Pittman suggested it was a re-expression of ad dollars that were paused before the election, followed by a subsequent pullback in February as advertisers reacted to economic uncertainty in a seasonally slow quarter.

Patrick Sholl of Barrington Research Associates inquired about the key factors influencing the third quarter, including the competitive landscape, new product launches from rivals, and how Fubo's marketing strategy might adjust from its typical seasonal pattern.

Answer

CFO John Janedis stated that July subscriber trends were in line with expectations and a typical seasonal uptick is anticipated for the fall sports season. He affirmed the team is closely monitoring subscriber acquisition cost (SAC), conversion, and churn in a competitive market. CEO David Gandler added that strong retention in the core English product supports a continued focus on efficient marketing to leverage the seasonal tailwind.

Patrick Sholl asked for details on the relative pricing and content costs for the core Fubo service versus the new skinny sports bundle, and whether the Q1 subscriber guidance decline was primarily due to the Fubo Latino offering changes.

Answer

CFO John Jenadis stated it was too soon to provide specific pricing for the new offering but noted the difference would be 'significant on a percentage basis.' Regarding the Q1 guidance, he explained that when adjusting for the impact of the Univision non-renewal, the company would have expected mid-single-digit subscriber growth, similar to or slightly better than Q4's 4% growth.

Patrick Sholl inquired about strategies to market the "longer tail" of film releases to potentially ease film rental costs. He also asked about the strategy for new theater builds, specifically whether they are primarily for market expansion or replacing older assets.

Answer

CEO Sean Gamble explained that while Cinemark supplements studio marketing, the primary goal is to maximize a film's total box office rather than specifically targeting film rental rates. Regarding new builds, he stated that while it can be a mix, the current focus of the reactivated pipeline is more on expansion into new, underserved markets rather than replacing existing theaters, guided by market opportunity and potential returns.

Patrick Sholl of Barrington Research inquired about using operating hours to manage capacity amid a growing box office and asked about the strategy and pace of recliner seat conversions.

Answer

CEO Sean Gamble explained that operating hours are flexed based on profitability but may not fully solve capacity constraints during peak weekend times. On recliners, he stated that with 70% of the domestic circuit converted, the company is not targeting 100%, instead evaluating conversions on a theater-by-theater basis to ensure positive returns without sacrificing too much capacity in high-demand locations.

Patrick Sholl inquired about Cinemark's approach to ticket pricing given the strong upcoming film slate and potential capacity constraints, and how it markets alternative content to ensure it stands out.

Answer

CFO Melissa Thomas stated they expect modest domestic average ticket price growth in 2025, driven by strategic pricing and a higher premium format mix, using data analytics to optimize both attendance and box office revenue. CEO Sean Gamble explained that marketing for alternative content is often highly targeted to niche audiences through established channels, such as an artist's fanbase, which they supplement with Cinemark's own marketing reach.

Patrick Sholl of Barrington Research Associates inquired about the potential impact of tariffs on the Home Services business and requested an update on the company's mix of media sources, particularly the contribution from recent acquisitions.

Answer

CEO Douglas Valenti stated that despite industry chatter, QuinStreet is not seeing any indication that tariffs will impact client spending or the company's outlook for Home Services, which is still expected to grow 15-20%. On media sources, Valenti declined to provide a specific mix for competitive reasons but confirmed the Aquavita Media acquisition has been highly successful in expanding media opportunities beyond the Google ecosystem.

Patrick Sholl asked about the potential impact of tariffs on the Home Services vertical and sought clarity on the outlook for fiscal year 2026, specifically regarding a return to traditional seasonality versus a continued growth ramp.

Answer

CEO Doug Valenti responded that while Home Services clients have recently voiced concerns about tariffs, no spending reductions have occurred yet. He noted QuinStreet can pivot to less-impacted market segments if needed. For fiscal 2026, he projected strong double-digit growth absent tariff effects, but stated the uncertainty makes it too difficult to predict the exact growth rate and seasonal patterns at this time.

Patrick Sholl sought clarification on whether the 15% growth in non-insurance verticals included Home Services and asked about the expected margin profile for the agent-driven insurance business.

Answer

CEO Doug Valenti and CFO Greg Wong clarified that the 15% growth was for all non-insurance verticals combined, including Home Services. Mr. Valenti added that the agent-driven business is expected to have a margin profile that is as good or better than the direct business, particularly initially, as it will represent incremental yield on existing media traffic.

Patrick Sholl asked if the upcoming election could potentially resolve regulatory issues in states like California that are slow to approve profitable insurance rates. He also inquired about the expected impact of the interest rate trajectory on other verticals, such as Home Services and credit-driven businesses, and whether it could be a tailwind.

Answer

CEO Doug Valenti expressed doubt that the election would resolve state-level rate approval issues, noting that the situation in California will likely take a few more years to normalize. He explained that falling interest rates are a positive for personal loans and credit cards but a negative for the banking business's CD offerings, resulting in a relatively neutral net impact on the company's overall performance. The effect on Home Services and insurance is minimal.

Patrick Sholl from Barrington Research Associates asked for details on the Premion advertising product, specifically how advertisers view it following the exit of a key reseller relationship and the potential impact on national or political sales.

Answer

President, CEO & Director Mike Steib explained that Premion remains a valuable tool for local advertisers, offering targeted reach into the streaming audience that has moved from linear TV. He highlighted the product's synergy with TEGNA's owned and operated streaming apps and noted the company is actively seeking new partnerships similar to its previous constructive relationship with Gray.

Patrick Sholl of Barrington Research Associates asked about the Premion advertising product, specifically how advertisers view it following the exit of a reseller relationship and the broader impact on national or political advertising.

Answer

President, CEO & Director Mike Steib explained that Premion remains a valuable and synergistic product for local advertisers, allowing them to reach streaming audiences with enhanced targeting. He emphasized that the business complements TEGNA's owned and operated streaming apps and that the company is open to forming new, constructive partnerships.

Patrick Scholl from Barrington Research Associates asked for a follow-up on the Premion business, specifically how advertisers view the product following the exit of a reseller and its impact on national or political buys.

Answer

President & CEO Mike Steib explained that Premion offers significant value to local advertisers by providing access to streaming audiences with enhanced targeting capabilities. He noted the business is synergistic with TEGNA's owned streaming apps and that the company is actively seeking new partnerships to expand the service.

Patrick Sholl of Barrington Research Associates asked about the Premion advertising product, specifically how advertisers view it following the exit of a reseller relationship and what the broader impact might be on national or political advertising.

Answer

President, CEO & Director Mike Steib explained that Premion offers significant value to local advertisers by providing access to streaming audiences with enhanced targeting capabilities, leveraging trusted relationships with TEGNA's sales teams. He noted the business is highly synergistic with TEGNA's owned and operated streaming apps and that the company is actively engaged in conversations for new partnerships similar to the one it had with Gray.

Patrick Sholl from Barrington Research Associates asked about the Premion advertising product, specifically how advertisers view it following the exit of a major reseller partner and what the broader impact might be on national and political advertising sales.

Answer

President, CEO & Director Mike Steib explained that Premion offers significant value to local advertisers by extending their reach from linear TV to streaming, enhanced with demographic and location-based targeting. He noted the business is highly synergistic with TEGNA's own streaming apps, which are driving audience growth. Steib also mentioned that the company had a constructive partnership with Gray and is actively engaged in conversations to establish similar partnerships with others.

Patrick Sholl of Barrington Research Associates asked about the Premion advertising product, specifically how advertisers view it now that it's more focused on the TEGNA footprint following the exit of a reseller relationship, and what the broader impact might be for national and political advertisers.

Answer

President, CEO & Director Mike Steib explained that Premion remains a high-value product for local advertisers, allowing them to extend their reach from linear TV to streaming audiences with enhanced targeting capabilities. He highlighted the synergy between Premion and TEGNA's owned and operated streaming apps, which are driving audience growth. Steib also noted that the company had a constructive partnership with Gray and is open to similar arrangements in the future.

Patrick Sholl from Barrington Research Associates asked about the Premion advertising product, specifically how advertisers view it now that it is more focused on TEGNA's footprint following a reseller's exit, and the potential impact on national or political advertising buys.

Answer

President, CEO & Director Mike Steib explained that Premion provides real value to local advertisers by extending their reach from linear TV to streaming audiences with enhanced targeting capabilities. He emphasized that the Premion business is highly synergistic with TEGNA's own streaming apps, which are driving audience growth, and noted the company is open to forming new, constructive partnerships similar to its previous one.

Patrick Sholl asked for TEGNA's perspective on how regulators might view broadcast consolidation, specifically regarding the potential for the local news market to become too concentrated.

Answer

CEO Mike Steib countered that regulators should view the competitive landscape through the lens of 'Big Tech' dominance. He argued that companies like TikTok, YouTube, and Facebook dominate media consumption, including news, and that broadcasters have been 'hamstrung' for decades while competing against these massive, well-funded, and unregulated tech platforms.

Patrick Sholl requested more detail on the performance of TEGNA's CTV platform, Premion, and the specific challenges contributing to weakness in the national advertising segment.

Answer

CFO Julie Heskett explained that Premion's local advertising business continues to grow double-digits, but its national segment is challenged by large holding companies shifting to programmatic buying. CEO Mike Steib emphasized that local sales teams value the product's targeting capabilities and the company is focused on incentivizing them to drive growth.

Patrick Sholl questioned how political advertising share has shifted between broadcast and Premion and whether Premion's projected Q4 growth is being driven by political or non-political advertising.

Answer

CFO Julie Heskett explained that broadcast television continues to capture the majority of political ad spending. While Premion received some political revenue, it was not material. She confirmed that Premion's return to growth in Q4 is driven by its non-political business, particularly at the local level.

Patrick Sholl of Barrington Research Associates asked how The CW's advertising rates compare to peers given its growing sports viewership and inquired about shifts in spending among ad categories between Q2 and Q3.

Answer

President & COO Michael Biard responded that for comparable programming like NASCAR, The CW's ad rates are on par or better than the market. EVP & CFO Lee Ann Gliha added that advertising category trends remain consistent, with attorneys and home repair strong, while automotive continues to be a weak spot.

Patrick Sholl asked about the drivers of growth in the services advertising sector during the 2018 trade war and which service categories are currently underutilized on television.

Answer

EVP and CFO Lee Gliha explained that the 2018 growth came from the existing stable base of service-oriented clients who see direct results from TV ads, rather than new advertisers entering the market. She highlighted that there is currently a significant difference in the rate of decline between goods-based and services-based advertising categories.

Patrick Sholl from Barrington Research Associates questioned the impact of growing ad-supported Connected TV (CTV) services on NCM's business, specifically concerning its utilization, CPMs, and unique position in reaching younger audiences.

Answer

CFO Ronnie Ng acknowledged that CTV is a growing competitive area that NCM is monitoring. He stated that the company is actively building out a programmatic platform to compete directly in the CTV space. Ng noted that while NCM's demographic is younger than a typical CTV audience, it is currently difficult to measure a specific, direct impact from CTV's growth on NCM's platform.

Patrick Sholl of Barrington Research inquired how NCM's enhanced ability to deliver advertising more quickly helps monetize unexpectedly successful films. He also asked for a breakdown of advertising weakness between brand-focused versus performance-based campaigns.

Answer

CEO Tom Lesinski explained that the ability to deliver ads quickly, especially through programmatic channels, is a "great tool for improving utilization" when a movie outperforms, allowing them to sell incremental inventory rapidly. He stated that performance-based advertisers (CPG, pharma, travel) continue to invest due to quantifiable outcomes, while brand-awareness or image-focused advertisers are the ones more likely to pause spending in an uncertain economic environment.

Patrick Sholl inquired about the duration of the advertising headwinds mentioned for Q1, the impact of KPI-based ad sales on advertiser retention, and the proportion of pre-pandemic national advertisers that have not yet returned to the platform.

Answer

CEO Thomas Lesinski addressed the questions, stating that while Q1 faces temporary headwinds from tariffs and policy shifts, the sales pacing for Q2 looks very encouraging compared to the prior year. He highlighted that the NCMx data platform now supports approximately half of the company's business through KPIs and other measurements, indicating strong client adoption. Mr. Lesinski noted he did not have the exact figure for returning pre-pandemic advertisers but would provide it separately.

Patrick Sholl asked about the integration of interactive ad formats, like QR codes, with cinema partners' concession or merchandise offerings. He also inquired about the competitive landscape and stability of exhibitor relationships for screen advertising providers.

Answer

CEO Thomas Lesinski responded that nearly all ad units can feature a QR code, a capability heavily utilized within the NCMx platform for retargeting and attribution. He highlighted that NCM's QR code engagement rates are significantly higher than industry averages. Regarding the exhibitor network, Lesinski stated that the market is stable, with more contract renewals than changes in providers, though NCM remains opportunistic in pursuing new partnerships to enhance its footprint.

Patrick Sholl of Barrington Research Associates inquired about regional variations contributing to the expected revenue acceleration in the second half and asked about the go-to-market strategy in Los Angeles following a significant contract exit.

Answer

Interim CEO Nick Brien stated that no significant regional variations beyond historical norms are being observed. Regarding Los Angeles, he explained the lost contract was heavily tied to the weak entertainment vertical and the company is now focusing on generating new revenue by engaging independent and digital agencies and driving organic growth.

Patrick Sholl of Barrington Research requested more detail on the potential cost savings and operational efficiencies from the company's first two strategic imperatives. He also asked about geographical differences in revenue trends for the upcoming Q2, beyond the impact of exited contracts.

Answer

Executive Nicolas Brien clarified that the first imperative (sales strategy) is focused on driving revenue growth, while the second (modernizing workflow) involves smart investments in the tech stack. Executive Matthew Siegel addressed regional trends, noting that the West Coast remains a challenge while the South and Midwest are performing well, with strong MTA performance boosting the East.

Patrick Sholl requested more detail on the reported pricing strength and asked for an update on transit ridership levels relative to pre-pandemic figures and their impact on minimum contract guarantees.

Answer

CFO Matthew Siegel confirmed that most of the company's yield growth was driven by pricing. Regarding transit, he stated that MTA ridership was approximately 73% of 2019 levels in January, showing gradual improvement. He also noted that other major markets like D.C., Boston, and San Francisco are lagging behind New York's recovery pace, but the overall transit product is enhanced by increased digitization.

Patrick Sholl asked if there was a concern that recovering transit ridership could lead advertisers to reallocate budgets from billboards to transit. He also inquired about the impact of automated buying channels on attracting new advertisers and on overall pricing.

Answer

CEO Jeremy Male explained that while there is some advertiser crossover, transit and billboard assets often attract different advertisers targeting distinct audiences, mitigating reallocation risk. Regarding automated channels, he stated that programmatic CPMs are approximately $1 higher than those from the direct sales force. He confirmed that this channel is extending their reach to a host of new advertisers they would not have otherwise captured.

Patrick Sholl from Barrington Research Associates inquired about the reasons for the revised capital expenditure guidance and its potential impact on the pace of digital board installations. He also asked about the performance trends between static and digital billboards.

Answer

CFO David Sailer stated the CapEx revision was due to timing on shelter spend and cost savings from using more managed spaces, confirming it will not slow the planned number of digital installs. CEO Scott Wells explained that digital revenue is expected to systemically outperform static due to capital investment and advertiser demand for flexibility, although static remains a powerful tool for specific use cases and dedicated clients.

Patrick Sholl from Barrington Research Associates, Inc. inquired about the reasons for the revised capital expenditure guidance and its impact on digital board installations. He also asked about the performance trends of static versus digital assets and why static growth is lagging.

Answer

CFO David Sailer stated the CapEx guidance change was due to timing on contractual shelter spend and is not an initiative to slow digital investment; the company still expects to meet its digital installation targets for the year. CEO Scott Wells explained that digital revenue is expected to systemically outperform static due to higher capital investment and advertiser preference for flexibility, though he noted that static assets remain highly valued by a passionate base of advertisers for specific use cases.

Patrick Sholl from Barrington Research Associates, Inc. asked for details on the revised capital expenditure guidance and its potential impact on the pace of digital board installations. He also inquired about the performance trends of static versus digital advertising and whether the new 'In Flight Insights' tool could affect advertiser uptake on static displays.

Answer

CFO David Saylor explained the CapEx guidance change was due to timing on shelter contracts and a shift to some less expensive 'managed spaces,' not a strategic reduction in digital investment. CEO Scott Wells noted that digital revenue is expected to systemically outperform static due to capital investment and advertiser preference for flexibility, though static remains a powerful and valued tool for specific use cases. He expects both to coexist and grow, with digital likely growing faster.

Patrick Sholl from Barrington Research Associates, Inc. asked if the company plans to accelerate digital board installations with its increased U.S. focus and how trade uncertainty might affect those plans. He also requested a breakdown of the local versus national revenue mix within the digital segment.

Answer

CEO Scott Wells stated that the company does not plan to significantly accelerate the pace of digital conversions, maintaining a steady rate except in a few underpenetrated cities where ordinance changes could create opportunities. Regarding the digital revenue mix, management explained that the local versus national split for digital revenue is very similar to the overall business mix and not materially different from that of traditional print billboards.

Patrick Sholl of Barrington Research asked for an explanation for the slower digital revenue growth within the Airports segment and inquired about the company's strategy to mitigate potential revenue cannibalization from its other New York assets following the large MTA contract win.

Answer

CEO Scott Wells explained that the slower digital growth in Airports is a rebalancing after a long period where digital was the primary growth driver, and that strong performance in printed assets, often used for market domination campaigns, contributed to the shift this quarter. Regarding the MTA contract, Wells stated that cannibalization risk is low because the new inventory is largely incremental. He clarified that Clear Channel's prior New York footprint was concentrated in Times Square and at major choke points, whereas the MTA assets provide a much broader run-of-market distribution along key commuter corridors.

Patrick Sholl of Barrington Research Associates asked about capital allocation, questioning the duration of lower CapEx after the current hotel reinvestment cycle and the timing for reinvestment in other properties. He also inquired about the new value matinee pricing relative to pre-program levels and the current landscape for new builds or acquisitions in the theater division.

Answer

CFO Chad Paris confirmed a 'meaningful step down' in hotel CapEx is expected in 2026 as the heavy reinvestment cycle, highlighted by the major Hilton Milwaukee project, concludes. CEO Gregory S. Marcus added that recent projects were significant 30-40 year upgrades, not just routine refreshes. Regarding theater expansion, Marcus sees limited new build opportunities but is evaluating a few, while describing the M&A market as sporadic and unpredictable. He could not provide a direct comparison for the matinee pricing as it was previously market-specific.

Patrick Sholl of Barrington Research Associates asked about long-term capital allocation, specifically the expected CapEx level after the current hotel reinvestment cycle and the timing for projects at non-Wisconsin hotels. He also inquired about the new value matinee pricing relative to pre-program levels and the current opportunities for theater acquisitions or new builds.

Answer

CFO & Treasurer Chad Paris stated that hotel CapEx will see a 'meaningful step down' to a more normal run rate after the current heavy cycle, which was driven by the large Hilton Milwaukee project. CEO Gregory S. Marcus added that recent projects involved significant, infrequent 30-40 year CapEx. Regarding theater expansion, Marcus sees limited new-build opportunities and described the M&A market as sporadic and unpredictable. He could not provide a precise comparison for the matinee pricing as it was previously highly market-specific.

Patrick Sholl of Barrington Research Associates asked about the capital allocation strategy following the current hotel reinvestment cycle, inquiring about the expected duration of lower CapEx and potential for new theater investments. He also questioned the new value matinee pricing relative to pre-program levels and the current M&A and new-build landscape for theaters.

Answer

CFO & Treasurer Chad Paris confirmed a significant reduction in hotel CapEx is expected in 2026 as major projects conclude, while theater CapEx should remain stable. Chairman, President & CEO Gregory S. Marcus added that recent hotel CapEx was unusually high due to major, long-cycle renovations at several properties. Regarding theater strategy, Marcus noted that new-build opportunities are limited and the M&A market is sporadic and unpredictable. He also explained that pre-program matinee pricing was highly market-specific, making a direct comparison difficult.

Patrick Sholl of Barrington Research Associates asked about capital allocation, questioning the duration of lower CapEx post-reinvestment and the potential for new theater investments. He also inquired about the new value matinee pricing relative to pre-program levels and the current opportunities for theater acquisitions or new builds.

Answer

CFO & Treasurer Chad Paris confirmed a significant step-down in hotel CapEx is expected in 2026 after completing major projects, while theater CapEx should remain stable. Chairman, President & CEO Gregory S. Marcus added that recent hotel CapEx was unusually high due to extensive, long-cycle renovations. Regarding theater strategy, Marcus stated that new-build opportunities are limited and the M&A market is sporadic and unpredictable. He noted that pre-program matinee pricing was highly market-specific and did not provide a direct comparison.

Patrick Sholl of Barrington Research Associates asked about the long-term capital allocation strategy, specifically the expected CapEx levels after the current hotel reinvestment cycle and the timing for renovations at non-Wisconsin properties. He also inquired about the new value matinee pricing relative to pre-program levels and the current opportunities for new builds or acquisitions in the theater market.

Answer

CFO & Treasurer Chad Paris confirmed a significant step-down in hotel CapEx is expected in 2026 as the company moves past its heavy reinvestment cycle, with theater CapEx likely remaining stable. Chairman, President & CEO Gregory S. Marcus added that recent hotel CapEx was unusually high due to major, long-term projects like full bathroom renovations occurring simultaneously at several properties. Regarding theater expansion, Mr. Marcus sees limited new-build opportunities and described the M&A market as sporadic and unpredictable, often involving family-owned businesses.

Patrick Sholl of Barrington Research Associates, Inc. inquired about the specific impact of the Marcus Movie Club subscription program on ticket pricing and sought details on whether the strong hotel group booking pace was driven by specific markets or was more broad-based.

Answer

Gregory S. Marcus (executive) responded that while the company is pleased with the initial uptake of the Marcus Movie Club, its impact on ticket per caps is currently minimal. He noted that its penetration may differ from peers due to the existing strength of the company's Tuesday discount program. On the hotel side, Chad Paris (executive) clarified that the strong group pace is not tied to one specific market but is evident across several key properties. He attributed this success to recent renovations at hotels like the Grand Geneva and the Pfister, which have made them more competitive and attractive for group business.

Patrick Sholl of Barrington Research asked about the pricing strategy for the Movie Club relative to competitors. He also questioned the theater circuit's capacity to sustain or grow market share in 2025 and inquired about the current leisure environment for the hotel division.

Answer

CEO Gregory S. Marcus stated their Movie Club pricing is very close to their competitor's. On market share, he emphasized a focus on execution to grow with the industry. Marcus also noted that their large footprint of proprietary PLF screens provides a competitive advantage and flexibility. Regarding the hotel leisure environment, he explained that while post-pandemic 'revenge travel' has softened, it is being replaced by a more normal mix of business and group travel. He stressed the versatility of their 'special assets' which appeal to all segments. Executive Chad Paris added that their upper-upscale positioning helps insulate them from broader leisure softness and that they have sufficient theater capacity to manage peak demand effectively.

Patrick Sholl of Barrington Research asked if the company has recovered all of its lost market share and whether promotions are attracting lapsed customers or pulling from competitors. He also inquired if increased concession per caps were driven by merchandise sales.

Answer

CFO Chad Paris clarified that the value promotions are aimed at bringing back deeply value-driven customers who might otherwise not attend, rather than pulling share from competitors. Regarding concessions, he stated that while stand-alone merchandise is not a major factor, the company has successfully used film-specific souvenir cups and popcorn tubs to help drive concession purchases and increase the per capita spend.

Patrick Sholl of Barrington Research Associates asked about the 70mm film projector network, including its backlog, performance with "Film for IMAX" titles, and the factors influencing its growth.

Answer

CEO Richard Gelfond confirmed that 70mm film theaters perform "extremely well" during key releases, driving high capacity. While IMAX no longer produces new film projectors, he said the company is actively sourcing existing units and expects to have more available for Christopher Nolan's "The Odyssey" than for recent film releases, though supply remains limited.

Patrick Sholl requested more detail on how IMAX manages available release slots for 'Filmed for IMAX' titles, particularly in light of potential conflicts with international distribution schedules.

Answer

CEO Richard Gelfond explained that the scheduling process involves carefully balancing the entire slate, analyzing competition from Hollywood films, and identifying open windows for both Hollywood and local language productions. He conveyed that this strategic balancing act has been managed effectively.

Patrick Sholl from Barrington Research asked about the typical ramp-up period for new screen installations to reach full productivity and whether this timeframe has changed since the pandemic.

Answer

CEO Richard Gelfond explained that there is a 'seasoning period' for new theaters to ramp up, but the duration varies widely by market and location, making it difficult to state a universal trend. He added that the company has not conducted specific research to determine if this ramp-up period has shortened post-pandemic, though opening with a blockbuster film could accelerate it.

Patrick Sholl of Barrington Research Associates sought to clarify if there was a limit on subscriber acquisition spending, specifically if it was capped at the annual membership fee. He also asked about any learnings on subscriber retention from earlier member cohorts.

Answer

Global CEO Holger Bartel responded that member acquisition spending is limited by its ROI and effectiveness, not by a strict cap tied to the membership fee. He emphasized that as long as the payback is positive and immediate, the company will continue to invest. Regarding retention, Bartel explained that since the majority of club members joined in 2024, reliable data on renewal rates will not be available until the beginning of 2026.

Patrick Sholl of Barrington Research Associates questioned if subscriber acquisition cost (SAC) was capped by the annual membership fee, how the gross contribution from membership fees nets out against member benefits, and what the company has learned about subscriber retention.

Answer

Global CEO Holger Bartel clarified that acquisition spending is limited by ROI effectiveness, not a fixed cap, and will continue as long as the payback is positive. He noted that members value different benefits, with the primary draw being access to unique travel deals. On retention, Bartel explained that reliable data will not be available until 2026, as the majority of current club members converted in 2024 and their first renewal cycle has not yet occurred.

Patrick Sholl of Barrington Research Associates questioned if subscriber acquisition cost (SAC) was limited by the annual membership fee. He also asked about the net contribution from membership fees versus the cost of benefits and inquired about any early learnings on subscriber retention.

Answer

Global CEO Holger Bartel clarified that acquisition spending is guided by favorable ROI, not capped by the membership fee. He explained that members value the unique travel offers most, but other benefits like lounge access are also highly valued. Bartel noted that reliable data on member renewal rates will not be available until the beginning of 2026, as the majority of current club members joined in 2024.

Patrick Sholl sought to understand the limits on subscriber acquisition spending, asking if it was capped by the annual membership fee. He also asked about any learnings or data regarding subscriber retention efforts for cohorts acquired prior to the main 2024 conversion.

Answer

Global CEO Holger Bartel clarified that member acquisition spending is guided by its ROI and positive payback, not by a hard cap relative to the membership fee. He explained that because the majority of club members were converted legacy members in 2024, reliable data on renewal rates will not be available until the start of 2026, after their first renewal cycle.

Patrick Sholl of Barrington Research Associates sought to understand the limits on subscriber acquisition spending, the net contribution of membership fees versus benefits, and any early learnings on subscriber retention.

Answer

Global CEO Holger Bartel clarified that acquisition spending is guided by positive ROI, not a fixed cap, as the payback is immediate. He emphasized that members value access to unique deals most. Regarding retention, Bartel explained that since most members joined in 2024, reliable renewal data will not be available until their first cycle completes, with meaningful data expected in 2026.

Patrick Sholl of Barrington Research Associates questioned if subscriber acquisition cost (SAC) would be limited to the annual membership fee. He also asked about the net contribution from membership fees versus member benefits and any early learnings on subscriber retention.

Answer

Global CEO Holger Bartel clarified that acquisition spending is guided by ROI, not a fixed cap, and will continue as long as the payback is positive. He explained that members value various benefits, with access to unique deals being primary. Regarding retention, Bartel stated that reliable data on renewal rates will not be available until 2026, as the bulk of current club members joined in 2024.

Patrick Sholl of Barrington Research inquired about the main drivers for member acquisition, specifically whether it's deal-driven, and how changing travel dynamics affect the company's ability to source deals.

Answer

Executive Christina Ciocca confirmed that exclusive club offers are the biggest draw for converting members, supplemented by a suite of other benefits. Executive Holger Bartel added that recent consumer hesitancy creates opportunities to secure strong 'distressed inventory' deals from suppliers, which in turn attracts more members to the club.

Patrick Sholl inquired about the engagement levels of legacy members who have not yet converted, the key motivators for joining the paid club, and the recent performance weakness in Germany. He also asked if marketing expenses were being shifted to promote the new paid service.

Answer

Holger Bartel (executive) stated that non-paying member engagement remains stable and that the company is on pace to increase its paid member count by 50% in Q1 2025. Christina Ciocca (executive) added that new benefits like lounge access for delayed flights and weekly giveaways are driving conversions. Bartel attributed the Q4 weakness in Germany to a confluence of temporary factors, including ad timing, an accounting true-up, and political uncertainty, and does not view it as a trend.

Patrick Sholl of Barrington Research asked if the shift to a subscription model necessitates new investments in areas like customer service or deal research, and questioned advertiser expectations regarding membership reach during the transition.

Answer

Executive Holger Bartel explained that the membership fee creates a 'closed user group,' enabling better, exclusive offers that members value. For advertisers, he stated that a plan is in place to maintain their reach in 2025 by allowing non-paying legacy members to see, but not purchase, exclusive deals. This strategy is expected to maintain or grow advertising revenues, as paying members show higher engagement.

Patrick Sholl of Barrington Research asked about the level of stabilization required in the Owned & Operated (O&O) business to reach full-year positive EBITDA and how the Commerce Media segment would perform in a softer consumer spending environment.

Answer

Executive Donald Patrick clarified that the company can achieve positive full-year EBITDA even with a declining O&O segment, driven by strong growth in the Commerce Media business in the second half. He explained that in an economic downturn, the O&O business can benefit from lower media costs, while the Commerce Media business sees increased interest from new partners seeking incremental revenue, offsetting potential declines in consumer spending.

Inquired about the classification of the call center business, its scale outside of the ACA marketplace, and whether the decline in the O&O business could negatively impact the data supporting the growing Commerce Media segment.

Answer

Executives clarified that call centers are under 'agency services,' not O&O, and they continue to operate in health, life, and home services despite recent regulatory and media cost challenges. They also stated that while O&O traffic is lower, the 14 years of historical first-party data is sufficient to support the Commerce Media business, and an inflection point for consolidated company growth is expected in H2 2025.

Patrick Sholl requested insights into the 2026 political cycle compared to the 2022 midterm and asked how investors should view the upcoming reverse compensation negotiations with network partners, given MVPD subscriber trends.

Answer

Chairman and CEO Hilton Howell noted that political ad buys for the current cycle are coming in much earlier and larger than they did for the previous midterm, though the category remains difficult to predict. On reverse comp, Chief Legal and Development Officer Kevin Latek confirmed that MVPD subscriber trends and network DTC services are key topics in the ongoing, complex negotiations with affiliate partners.

Patrick Sholl of Barrington Research inquired about any shifts in political ad spending between local stations and networks, the ability to capture revenue on station apps, and current areas of strength or weakness among core advertising verticals.

Answer

Patrick LaPlatney, Co-CEO & President, explained that all political ad categories grew except for Senate races, where spending shifted out of Gray's footprint. He identified Auto and Communications as weak core ad categories, partly due to political ad displacement. Sandy Breland, EVP & COO, added that new local direct sales, fueled by digital, remained strong.

Patrick Sholl of Barrington Research Associates inquired about the consumer trends observed in CuriosityStream's direct-to-consumer subscription business.

Answer

CEO Clint Stinchcomb stated that the direct subscription business is being managed to be relatively flat, as its performance is a direct function of a highly optimized and sometimes lumpy marketing spend. He noted the company is prioritizing larger licensing opportunities but anticipates new service launches with major partners will also influence direct subscription trends.

Patrick Sholl of Barrington Research inquired about the 2025 revenue outlook, specifically the expected contributions from recurring subscription revenue versus variable advertising and content licensing revenue. He also asked about the company's strategy for managing subscriber activity in light of macroeconomic uncertainty.

Answer

CEO Clint Stinchcomb explained that recurring subscription revenue exceeds operational costs, ensuring a minimum free cash flow. He detailed that variable revenue, particularly from large-scale content licensing for AI training, is expected to be significant in 2025, potentially exceeding direct revenue. While not contractually recurring, these deals can become "de facto recurring" through strong partner relationships. Regarding subscriber strategy, Stinchcomb noted their approach involves using high-profile original specials to attract users and a deep library, enhanced by content aggregated for licensing deals, to drive retention.

Patrick Sholl questioned the growth strategy for the podcasting segment following significant adjustments and asked about the stickiness of the services offered within the Digital Marketing Services (DMS) business.

Answer

CEO Mary Berner detailed that podcasting growth will come from adding new shows, developing new partnerships, growing existing audiences, expanding into video, and leveraging local brands. CFO Francisco Lopez-Balboa highlighted the DMS business's high and improving retention rate, noting it behaves like a subscription model due to low churn and strong new customer acquisition, with over half of DMS customers being new to Cumulus.

Patrick Sholl from Barrington Research asked about the impact of interest rates on advertiser spending and sought clarification on the drivers behind the revenue decline in the podcasting segment, questioning if it was related to advertiser skittishness.

Answer

CFO Francisco Lopez-Balboa explained that interest rate sensitivity varies by category, with financial products being most affected, and noted that a combination of lower rates and lower inflation would be ideal for broad advertiser sentiment. President and CEO Mary Berner clarified the podcasting decline was not due to advertiser sentiment but was a result of a difficult year-over-year comparison after changes to their representation agreement with Daily Wire, as well as technical impacts from the iOS 17 update. She stressed that the non-Daily Wire podcast portfolio continues to thrive. Lopez-Balboa added that podcasting is pacing for nice growth in Q4.