Steven Cahall

Steven Cahall from Wells Fargo asked for more detail on the 2026 outlook for self-pay net adds, particularly how the 'Companion subscriptions' initiative, which was additive in Q4 2025, might act as a drag in 2026. He also questioned if Companion subscriptions lead to trade-downs or are additive at the household level, and sought information on the go-to-market strategy with OEM dealers, its impact on churn, and associated Subscriber Acquisition Costs (SAC).

Answer

CEO Jennifer Witz clarified that Companion subscriptions launched earlier than anticipated in December, boosting Q4 2025 self-pay net adds, which in turn makes the 2026 guidance for 'modestly lower' net adds a timing effect. She emphasized that Companion subscriptions add value for loyal subscribers and position the company for future rate increases. For OEM dealers, Ms. Witz noted the expansion of their three-year subscription program to over 15 brands, expecting increased demand in new and used vehicles, which positively impacts churn and acquisition.

Steven Cahall from Wells Fargo asked for clarification on the 2026 outlook for self-pay net adds, specifically how the earlier introduction of Companion subscriptions, which was additive in Q4 2025, might become a drag in 2026, and if it contributes to trade-downs or is additive at the household level. He also inquired about the go-to-market strategy with OEM dealers, its impact on churn, and any associated subscriber acquisition costs (SAC).

Answer

CEO Jennifer Witz explained that while Companion subscriptions were successful and pulled forward, boosting Q4 2025 self-pay net adds, their earlier launch means a timing impact for 2026, leading to a "modestly lower" guidance. She noted that the program adds value for loyal subscribers and positions the company for a rate increase. Regarding OEM dealer programs, she mentioned expansion to over 15 brands, offering three-year subscriptions at the point of purchase, which is expected to drive demand and improve churn.

Steven Cahall of Wells Fargo Securities questioned the strategy behind simplifying in-car plans, the resulting benefits for churn and ARPU, and the expected net subscriber addition trends for the remainder of the year, considering auto market and streaming headwinds.

Answer

CEO Jennifer Witz outlined a three-part pricing strategy: enhancing value in full-price plans, rolling out modular pricing like a $9.99 plan to improve retention, and introducing the ad-supported 'Play' tier. She expects ARPU to improve due to a March rate increase. Regarding net adds, Witz anticipates different seasonality, with a projected 300,000 reduction in streaming subs for the year, but noted the in-car business remains strong due to new acquisition programs and low churn. EVP & COO Wayne Thorsen added that 'Play' targets price-sensitive customers using Martech to avoid cannibalization.

Steven Cahall asked for details on the new ad-supported tier's acquisition process and margin profile, and requested quantification of the non-core headwinds impacting self-pay net adds this year.

Answer

CEO Jennifer Witz quantified the headwinds from click-to-cancel, shorter promos, and reduced streaming marketing as a 'couple of hundred thousand' incremental negative net adds for 2025. EVP & COO Wayne Thorsen detailed the ad-supported tier, explaining it will be a targeted rollout in the 'high single digits' price range aimed at price-sensitive cohorts. Jennifer Witz added that she expects the tier to have high variable margins, with a more significant impact in 2026.

Steven Cahall asked about the 2025 churn outlook, particularly with headwinds from 'click to cancel,' and inquired about the nature of Tesla and Rivian subscriptions and the long-term potential of the EV market.

Answer

CEO Jennifer Witz acknowledged that churn could see pressure in the first half of 2025 due to onetime factors but is expected to improve in the second half. She clarified that Tesla and Rivian integrations are embedded streaming services that offer a 360L-like experience and represent an exciting, ongoing part of the company's subscriber acquisition strategy.

Steven Cahall asked for more detail on the composition of self-pay net additions, particularly the contribution from streaming subscribers, and inquired about the potential to add on-demand music functionality to the streaming product.

Answer

CEO Jennifer Witz attributed the quarter's positive net adds primarily to lower churn and higher automotive volumes, confirming that streaming subscriptions have grown and are expected to continue doing so. Regarding on-demand music, Witz stated it is a key long-term objective that will be enabled by the new, unified tech platform. The goal is to create an integrated, interactive bundle combining SiriusXM's curated discovery with Pandora's on-demand functionality to unlock new demand, particularly within their affluent, older subscriber base.

Steven Cahall asked for more color on domestic park trends, specifically Walt Disney World's performance and booking pacing, and sought an update on fiscal 2027 adjusted EPS growth guidance and CapEx.

Answer

CEO Bob Iger stated that Walt Disney World had a very good quarter with strong attendance and pricing, benefiting from a hurricane overlap. He noted that bookings for the full year are up 5%, weighted towards the back half. Regarding 2027 guidance and CapEx, he confirmed no changes or updates.

Steven Cahall asked for more color on domestic park trends, specifically Walt Disney World's performance and bookings pacing, and sought an update on fiscal 2027 adjusted EPS growth guidance and CapEx expectations.

Answer

CFO Hugh Johnston reported a very good quarter for Walt Disney World, benefiting from a hurricane overlap, strong attendance, and pricing. He noted that bookings for the full year are up 5%, weighted towards the back half. Johnston confirmed no update on the fiscal 2027 guidance, implying no change.

Steven Cahall questioned the drivers behind the accelerating growth in the Experiences segment for Q4, particularly in domestic parks and cruises, and also asked about the outlook for overall cash content spend in fiscal 2026.

Answer

CFO Hugh Johnston highlighted record Q3 revenue at Walt Disney World, strong performance at Disneyland Paris, and excellent cruise ship bookings, which are up 6% for Q4. He noted some consumer stress in China is impacting per caps there. He deferred the question on 2026 cash content spend to the Q4 earnings call.

Steven Cahall inquired about the strategic rationale for selecting Abu Dhabi for a new theme park and asked for clarification on whether the domestic park margin improvement was driven primarily by the cruise business or by underlying park performance.

Answer

CEO Robert Iger detailed the choice of Abu Dhabi, highlighting its strategic location as a global crossroads, access to a large income-qualified population, and a strong partnership with Miral. CFO Hugh Johnston clarified that the margin accretion in the Experiences segment was broad-based, reflecting strength in both the core Parks business and the Cruise Line, not just a mix shift towards cruises.

Steven Cahall questioned the ideological approach and level of conservatism baked into the new multiyear guidance. He also asked if the EPS growth acceleration from fiscal '25 to '26 is primarily due to comping one-time events and sought details on the ESPN flagship's launch costs, ARPU, and breakeven timeline.

Answer

CFO Hugh Johnston stated the multiyear guidance is driven by significant improvements in DTC and continued investments in Parks, and it is intended to provide investors with a clear view of expected returns. He noted it's too early for flagship ARPU details but expects the product to be additive in 2026. CEO Robert Iger added that confidence is also based on the strong content pipeline and its proven multiplier effect on streaming consumption.

Steven Cahall (Wells Fargo) asked Chris Winfrey about the competitive environment with fiber overbuilders, specifically when a slowdown in their activity might occur given their perceived inability to meet ROI goals. He also inquired if a $40 gig offer on Slide 5 indicated an opportunity for Charter Communications to be more promotional this year and its potential impact on subscriber trends.

Answer

Chris Winfrey, President and CEO of Charter Communications, clarified that the $40 gig offer has been in the market since September 2024 for bundles with two mobile lines or video, positively impacting gig uptake. Regarding fiber overbuilders, he reiterated that their ROI might be based on 'going concern' rather than traditional financial returns, making it difficult to predict a slowdown, but noted that increasing costs per passing in less dense areas could naturally throttle activity.

Steven Cahall asked about the expectation for fiber overbuilders to reach their ROI goals, the potential for a slowdown in competitive activity, and whether a $40 gig offer indicates a more promotional strategy for subscriber trends.

Answer

President and CEO Chris Winfrey reiterated skepticism about fiber overbuilders achieving traditional financial ROIs, suggesting they might be investing for 'going concern' ROI, and therefore does not expect a competitive slowdown. He clarified that the $40 gig offer, bundled with two mobile lines or video, has been in the market since September 2024 and is not a new promotional strategy, but rather a consistent offering that has positively impacted gig uptake.

Steven Cahall asked about the strategy for integrating Cox customers, particularly given different Internet ARPUs, and the key drivers behind the forecast for declining capital intensity post-acquisition.

Answer

President & CEO Chris Winfrey cited extensive experience in migrating customers from higher-ARPU acquisitions by offering more value through speed and bundling, especially with mobile. He explained that declining capital intensity will come from technology platform consolidation, procurement scale, and the natural decline in Charter's standalone peak spending cycle.

Steven Cahall asked about the timing for seeing benefits from the new video offering and the ARPU contribution from Spectrum One customers rolling to paid mobile plans.

Answer

President and CEO Christopher Winfrey stated that the full, seamless video experience, including a unified portal for managing streaming apps, should be operational in the first half of 2025. He noted they are already seeing a significant uplift in video sell-in due to the new bundling. CFO Jessica Fischer explained that while free mobile lines are converting to paid at strong rates, the year-over-year ARPU impact is normalizing. She highlighted that mobile ARPU growth is now being driven more by customers choosing higher-tier 'Unlimited Plus' plans.

Steven Cahall asked about the unique aspects of HBO's content development process, focusing on its ability to reinvent with new originals rather than relying on minable IP, and what differentiates it from other streaming services. He also asked CFO Gunnar Wiedenfels about future sports rights opportunities, specifically whether they will arise organically from available market rights or if inorganic strategies might be necessary.

Answer

CFO Gunnar Wiedenfels clarified that future sports rights opportunities are primarily expected to arise organically from the market. CEO David Zaslav detailed HBO's unique content development, attributing its success to the exceptional, long-tenured creative team (Casey Bloys, Amy Gravitt, etc.) who prioritize compelling storytelling and foster a "community conversation" around their shows. He emphasized that HBO's reputation for quality attracts top talent and allows for efficient content acquisition, further enhanced by improved collaboration with Channing Dungey's production team.

Steven Cahall asked about the unique aspects of HBO's content process, specifically its ability to reinvent with new originals rather than relying on minable IP, and what differentiates it from other streaming services in content development. He also questioned Gunnar Wiedenfels on sports opportunities for Discovery Global, asking if future rights acquisitions would be organic or if inorganic strategies might be necessary to ensure sufficient sports rights.

Answer

Gunnar Wiedenfels, CFO, clarified that he was primarily thinking about organic opportunities coming up in the market for sports rights. David Zaslav, President and CEO, emphasized HBO's uniqueness stems from its focus on working with the best creatives, a long-standing passionate team (Casey Bloys, Amy Gravitt, etc.), and a commitment to compelling storytelling that fosters community conversation. He noted that HBO attracts top talent for less money due to its prestige and quality reputation, further enhanced by the collaboration with Warner Bros. Television.

Steven Cahall inquired about the potential capital structure and leverage ratio for the global linear network following the company's reorganization, and also asked about the potential scale of the 'extra member' revenue opportunity for the Max streaming service in the U.S.

Answer

CFO Gunnar Wiedenfels stated it was premature to speculate on capital structures but noted the reorganization provides transparency and optionality. President & CEO David Zaslav added the new structure clarifies their business segments and allows for quick strategic moves. Regarding the 'extra member' feature, Wiedenfels explained it's a 12- to 18-month initiative, with benefits expected to grow into 2026 as it globalizes and messaging becomes more assertive.

Steven Cahall asked how Warner Bros. Discovery can accelerate Direct-to-Consumer (DTC) investments while simultaneously raising its DTC EBITDA outlook, and when the Studios and Networks segments might shift from cost-cutting back to growth investment.

Answer

CFO Gunnar Wiedenfels explained that DTC growth in new markets is balanced by profitability in mature markets, enabling simultaneous investment and profit growth. For other segments, he noted the Studios business has a long cycle for changes to show financial impact. CEO David Zaslav and CEO of Global Streaming JB Perrette added that Max is at a key inflection point, with growth driven by a stronger content slate, international rollouts, and new partnerships.

Steven Cahall asked about the performance of the creative business within the strong media and advertising growth, the implications of AI and generative AI for both media and creative, and whether there's an update on potential upside to previously discussed synergies from the IPG acquisition.

Answer

CEO John Wren characterized the creative business as stable, with growth primarily driven by media. CTO Paolo Yuvienco elaborated on the integration of generative AI and agentic frameworks across workflows, citing examples in automotive, sports marketing, commerce, and healthcare, which enhance speed and creative differentiation. John Wren also confirmed that identified synergies are clearly in excess of initial promises, with more details to be shared later.

Steven Cahall with Wells Fargo questioned the performance of the Creative business within Media and Advertising, the implications of AI and generative AI for both media and creative, and sought an update on potential upside to previously announced merger synergies.

Answer

CEO John Wren stated that the Creative business is stable, with growth primarily driven by Media. CTO Paolo Yuvienco elaborated on the integration of generative AI across various workflows, including consumer research, creative concepting, production, and customer journey planning, highlighting its impact on speed and differentiated solutions. John Wren also confirmed that identified synergies are in excess of initial promises.

Steven Cahall of Wells Fargo Securities inquired about the performance of the creative business within the Media and Advertising segment and the potential margin mix implications from the growing media business.

Answer

Executive VP & CFO Philip Angelastro noted the creative business was flat to slightly down in the quarter, with stronger performance internationally. Chairman & CEO John Wren added that media is a very strong growth area and that the company is developing new products and opportunities to increase margins within it, expressing high optimism for its future.

Steven Cahall of Wells Fargo & Company asked about trends in the Healthcare vertical, its largest sector, and whether creative services are growing as robustly as media within the Media & Advertising discipline.

Answer

CEO John Wren attributed the Q1 Healthcare decline to cycling a prior-year client loss and affirmed the segment's long-term strength. He noted that while Media growth is very strong, Creative services, though core to Omnicom's IP, are adjusting to new technologies. CFO Phil Angelastro added that Creative was slightly down in Q1 but is expected to improve, while production services are growing well.

Steven Cahall of Wells Fargo & Company asked when Omnicom and IPG could begin joint business pitches and if Omnicom could provide a net organic revenue growth figure for comparison purposes.

Answer

Chairman and CEO John Wren explained that regulatory rules prevent joint pitching until the merger closes, but they are using the time to plan for rapid post-close integration. EVP and CFO Phil Angelastro stated that Omnicom will not change its reporting to a 'net revenue' basis, as third-party costs are integral to how they manage the business.

Steven Cahall of Wells Fargo & Company sought clarity on the Q4 organic growth outlook, noting the full-year guidance implies a deceleration, and asked if this was intentional conservatism. He also requested a deeper analysis of the Precision Marketing segment's performance and its longer-term growth prospects.

Answer

CEO John Wren stood by the guidance of hitting the high end of the 4-5% range, stating that the main variable is the level of project spend in Q4. For Precision Marketing, he attributed slower growth to a temporary spending pause from the U.K. government following a snap election, with a rebound expected in Q4. CFO Philip Angelastro reaffirmed their long-term commitment to the segment as a strategic growth area, highlighting the recent LeapPoint acquisition and new business wins.

Steven Cahill of Wells Fargo inquired about the components of the quarter-turn leverage improvement from M&A and asked about the impact of the WANF affiliation change on the Q3 retransmission revenue and EBITDA guidance.

Answer

EVP & CFO Jeff Gignac confirmed the quarter-turn leverage reduction is inclusive of funding and synergies but offered no further breakdown. He also affirmed the WANF change impacts the Q3 guide, as the station's P&L will shift more toward advertising. Chairman & CEO Hilton Howell added that the company is very excited about WANF's potential as an independent station.

Steven Cahall asked if Gray is open to larger, strategic, equity-based M&A transactions and inquired about the potential capacity for debt repurchases this year, given the company's increased liquidity.

Answer

Chairman and CEO Hilton Howell confirmed that Gray is exploring all types of strategic transactions with various structures, including those that could be deleveraging, with swaps being a likely first opportunity. CFO Jeff Gignac added that M&A could be used to delever and that the company will deploy its enhanced liquidity wherever it gets the 'most bang for the buck,' including debt repurchases, while judiciously managing the capital structure.

Steven Cahall of Wells Fargo asked about potential M&A opportunities like station swaps, whether Gray would consider monetizing unused Assembly acreage for M&A dry powder, and how the company plans to defend its political advertising share against Connected TV in 2026.

Answer

Chairman and CEO Hilton Howell stated that while they would consider any profitable transaction, there are no specific plans to sell Assembly acreage for M&A. He affirmed interest in M&A opportunities like swaps. COO Sandy Breland addressed the political question, highlighting Gray's strong local linear and digital audiences and a dedicated team focused on leveraging these assets to grow its share of political ad dollars. She noted they expect this sector to grow for Gray.

Steven Cahall of Wells Fargo asked for more detail on the potential for in-market duopolies under a deregulatory FCC and about the process for reverse compensation negotiations, including timing and lessons learned from peers.

Answer

Kevin Latek, EVP, Chief Legal & Development Officer, stated it was impossible to predict specific FCC rule changes due to legal and political uncertainties. Regarding network negotiations, he explained that serious talks typically begin a month or two before contract expiration and that the company learns nothing from peer renewals due to confidentiality. The focus remains on Gray's own value proposition to the networks.

Steven Cahall of Wells Fargo Securities questioned whether advertising pressure on the Scripps Networks segment is structural or cyclical, and asked about future sports acquisition opportunities for the ION network. He also inquired about the company's strategy for its preferred equity stake and how it factors into capital allocation decisions.

Answer

President and CEO Adam Symson attributed the Networks' strong performance to its sports strategy and ION's unique distribution across over-the-air, cable, and FAST platforms, which he believes differentiates it from peers. He confirmed they will continue to seek financially sound sports deals. CFO Jason Combs addressed the preferred equity, stating that a takeout is unlikely in the near term. He explained the focus is on debt reduction, and the company will continue to PIK the dividend to prioritize using cash for deleveraging.

Steven Cahall questioned the visibility into the Scripps Networks' Q2 revenue guide, the drivers behind the low single-digit expense growth in Local Media for Q2, and the potential revenue opportunity from gaining direct negotiating rights with virtual MVPDs, asking for a potential sizing of the uplift.

Answer

CFO Jason Combs confirmed a high degree of confidence in the Q2 Networks guide, with about 80% of revenue already committed. He explained that the Q2 Local Media expense growth is driven by sports programming rights costs, with all other expenses being flat. CEO Adam Symson stated there is 'absolutely' a significant revenue opportunity in directly negotiating with vMVPDs, as they need local content to be competitive, but he declined to quantify the potential uplift.

Steven Cahall of Wells Fargo asked for more detail on advertising trends within the Scripps Networks division and the expected contribution from local sports to core revenue in 2025. He also had follow-up questions on the debt refinancing, specifically regarding the new accounts receivable securitization facility's impact on free cash flow and the strategy for addressing 2027 debt maturities.

Answer

CFO Jason Combs described the Networks ad market as mixed, with pricing pressure in general market and direct response but strong Connected TV (CTV) growth, which is expected to exceed 30% in Q1. President and CEO Adam Symson added that ION's broad distribution gives it a unique advantage. Regarding local sports, Jason Combs projected low single-digit growth contribution to core revenue in 2025. On the debt, he confirmed the AR facility's interest is included in the 2025 guide and that the company is confident in managing its 2027 maturities via free cash flow and ongoing discussions with debt holders.

Steven Cahall of Wells Fargo Securities, LLC inquired about the delayed sale of the Bounce network, the underlying trends in the local core advertising market for 2025, and the company's appetite for selling stations under a more deregulatory FCC.

Answer

President and CEO Adam Symson stated that the Bounce sale process remains competitive with a goal for a 2025 transaction, highlighting the significant deleveraging achieved even without the sale. Chief Operating Officer Lisa Knutson noted sequential improvement in Q4 core advertising but deferred 2025 guidance. Symson also confirmed a willingness to transact on non-strategic assets to improve performance and capitalize on potential industry consolidation.

Steven Cahall questioned the company's view on separating its content studio from its linear distribution assets, similar to peers, and asked about the rationale for share buybacks given the stated priority of content investment.

Answer

EVP & CFO Patrick O’Connell defended the current integrated structure, stating that AMC is different from peers due to its large studio, owned IP, and significant streaming business, which all work together. Regarding capital allocation, he positioned the modest buyback as opportunistic given the stock's valuation, but secondary to major balance sheet actions like debt reduction and maturity extension.

Steven Cahall inquired about the expected drivers for revenue acceleration through the rest of the year, the company's exposure to digital advertising weakness versus linear, and for an update on projections for content spend and amortization in 2025.

Answer

CFO Patrick O'Connell cited compounding streaming price increases and the timing of content licensing deals as key drivers for revenue acceleration. Chief Commercial Officer Kim Kelleher acknowledged market uncertainty but expressed confidence in their premium content and advanced ad tools, noting they are making more linear inventory digitally addressable. O'Connell also confirmed that content amortization and cash spend are still expected to be down slightly year-over-year, with production volume remaining flat.

Steven Cahall asked about the strategic trade-off between retaining new seasons for AMC+ versus licensing them directly to larger platforms like Netflix, and questioned the capital allocation strategy, particularly the de-emphasis on buybacks and what it implies for future Adjusted Operating Income (AOI) trends.

Answer

CEO Kristin Dolan emphasized that new seasons on AMC+ are critical for acquiring new subscribers, a trend validated by data from the Netflix partnership. President of Entertainment Dan McDermott added that the company's studio strategically produces for both its own platforms and third parties, like 'Silo' for Apple, to build long-term asset value. On capital allocation, CFO Patrick O'Connell noted the industry's ongoing evolution and stated the priority is generating robust free cash flow to maintain financial flexibility and de-risk the business, rather than near-term share repurchases.

Asked for an opinion on whether the current M&A environment is a buyer's or seller's market and inquired about any paradigm shifts in the structure of reverse compensation deals with networks.

Answer

From the company's perspective, they have a strong balance sheet and great assets, which creates significant value opportunities in the M&A market. They are dispassionately exploring all options, including acquisitions, swaps, and sales. Regarding reverse compensation, the trend of a 'bend in the curve' continues, with the programming fee expense line remaining flattish as new deals are structured with favorable terms for both parties.

Steven Cahall of Wells Fargo Securities asked about additional sports rights opportunities for The CW and requested deeper insight into the advertising market, including digital growth and trends between local and national revenue.

Answer

Chairman & CEO Perry A. Sook highlighted that the national networks (News Nation, The CW) were a bright spot in advertising. President & COO Michael Biard added that The CW is actively pursuing more sports opportunities, particularly in college sports. He noted the advertising community is responding well to the consistent ratings delivered by new sports programming.

Steven Cahall inquired if Nexstar would be comfortable transacting on M&A during an NPRM phase and asked for an update on the full-year EBITDA outlook given current market trends.

Answer

Chairman and CEO Perry Sook affirmed the company's willingness to take calculated risks and pursue M&A during an NPRM's pendency. EVP and CFO Lee Gliha stated that while they do not update EBITDA guidance, investors should focus on the advertising market and subscriber attrition as key variables. Sook added that their exposure to goods-based advertising is limited and business is unfolding as anticipated.

Steven Cahall of Wells Fargo asked about the potential for M&A accretion given higher interest rates, the role of spectrum assets in consolidation, and whether restructuring costs are fully accounted for.

Answer

Executive Perry Sook stated that while past deals were highly accretive (40-60%), any new M&A must be substantially more accretive than share buybacks. CFO Lee Ann Gliha confirmed that the costs for the recent operational restructuring are behind the company, with a ~$12 million onetime charge taken in Q4 2024.

Steven Cahall of Wells Fargo asked for context on the full-year political revenue performance relative to prior guidance and cycles. He also questioned how the 54 CW-affiliated stations contribute to net retransmission revenue and inquired about a potential breakeven timeline for The CW.

Answer

CFO Lee Ann Gliha confirmed that Nexstar's political market share was in line with its low-teens guidance, achieving a record year versus 2020 despite some spending shifting to markets with less Nexstar presence. She clarified that profitability improvements from moving CW affiliations in-house are realized at the station level and are not a material driver of the network's P&L improvement. She reiterated that the company is on track to meet its previously stated profitability timeline for The CW.

Steven Cahall of Wells Fargo Securities questioned whether the current broadcast M&A landscape is a buyer's or seller's market and asked about any paradigm shifts in reverse compensation agreements with networks.

Answer

President, CEO & Director Mike Steib characterized the M&A market from TEGNA's perspective, emphasizing its strong balance sheet and assets create significant value opportunities, and the company will be a dispassionate capital allocator. Senior VP & CFO Julie Heskett addressed reverse compensation, stating that the trend of a "bend in the curve" continues, with the programming fee line item remaining flattish as deals are renewed.

Steven Cahall of Wells Fargo Securities asked for TEGNA's perspective on whether the current M&A environment is a buyer's or seller's market. He also inquired about any paradigm shifts in reverse compensation agreements with networks.

Answer

President, CEO & Director Mike Steib characterized TEGNA's position as strong, with a robust balance sheet and great assets, allowing them to be dispassionate capital allocators and pursue acquisition, swap, or sale opportunities that create shareholder value. Senior VP & CFO Julie Heskett addressed reverse compensation, stating that the trend of a 'bend in the curve' continues, with the programming fee line item remaining flattish year-over-year as deals are renewed with favorable terms.

Steven Cahall of Wells Fargo Securities asked for management's perspective on whether the current broadcast M&A landscape is a buyer's or a seller's market. He also inquired about any paradigm shifts in reverse compensation agreements with networks, such as changes in pricing algorithms.

Answer

President, CEO & Director Mike Steib characterized the M&A market from TEGNA's perspective, highlighting the company's strong balance sheet and assets, which create significant value opportunities. He reiterated that TEGNA is dispassionately exploring all options, including acquisitions, swaps, and sales. Senior VP & CFO Julie Heskett addressed reverse compensation, stating that the trend of a 'bend in the curve' continues, and TEGNA's reverse comp programming fee line item remains 'flattish' year-over-year as new agreements are negotiated.

Steven Cahall of Wells Fargo Securities questioned whether the current M&A environment is a buyer's or seller's market and asked about any paradigm shifts in reverse compensation deal structures with networks.

Answer

President & CEO Mike Steib declined to label the M&A market, instead highlighting TEGNA's strong position with a healthy balance sheet and valuable assets. CFO Julie Heskett reiterated that TEGNA is seeing a 'bend in the curve' on reverse compensation, with the programming expense line item becoming 'flattish' as new, more favorable deals are negotiated.

Steven Cahall of Wells Fargo Securities asked for TEGNA's perspective on whether the current M&A landscape is a buyer's or seller's market and inquired about any paradigm shifts in reverse compensation agreements.

Answer

President, CEO & Director Mike Steib stated that from TEGNA's perspective, its strong balance sheet and assets create significant value opportunities, and the company is dispassionately exploring all options. Senior VP & CFO Julie Heskett addressed reverse compensation, noting a continued 'bend in the curve' where programming fee growth is flattish as deals are renegotiated with favorable terms.

Steven Cahall of Wells Fargo Securities asked for management's perspective on whether the current M&A landscape is a buyer's or seller's market. He also inquired about any paradigm shifts in reverse compensation agreements with networks, such as changes in pricing algorithms.

Answer

President, CEO & Director Mike Steib addressed M&A by emphasizing TEGNA's strong balance sheet and quality assets, which position the company to be a dispassionate capital allocator and create value through acquisitions, swaps, or sales. On reverse compensation, Senior VP & CFO Julie Heskett reiterated that TEGNA continues to see a 'bend in the curve,' with the programming fee expense line remaining flattish year-over-year as new agreements are negotiated with favorable terms for both parties.

Steven Cahall of Wells Fargo Securities sought perspective on whether the current broadcast M&A landscape is a buyer's or seller's market and asked if there are any paradigm shifts occurring in reverse compensation agreements with networks, such as changes in pricing algorithms.

Answer

President, CEO & Director Mike Steib addressed M&A by stating that from TEGNA's perspective, its strong balance sheet and quality assets create significant value opportunities, and the company will be a dispassionate capital allocator. Senior VP & CFO Julie Heskett handled the reverse compensation question, reaffirming a previously identified 'bend in the curve,' with programming fees remaining flattish year-over-year as new deals are negotiated with favorable terms.

Steven Cahall asked about TEGNA's M&A strategy in light of potential FCC deregulation and whether the company feels it can act now or must wait for new rules. He also inquired if the Q2 guidance for advertising reflects conservatism or specific, observed market changes.

Answer

CEO Mike Steib stated that while the company anticipates a favorable deregulatory environment that will unlock accretive M&A, their capital allocation philosophy remains disciplined: deploy capital for shareholder value or return it via buybacks and dividends. CFO Julie Heskett confirmed that the Q2 advertising outlook is softer than Q1, reflecting lower consumer sentiment, but noted they are not seeing outright cancellations. CEO Mike Steib added that moments of uncertainty are opportunities for strong marketers.

Steven Cahall inquired about TEGNA's M&A strategy, asking if the company is more likely to be a buyer or seller amid potential deregulation, and questioned the drivers behind the Q1 expense guidance.

Answer

CEO Mike Steib stated that TEGNA will be a disciplined capital allocator with significant optionality due to its strong balance sheet, ready to participate in value-creating M&A discussions. CFO Julie Heskett clarified that the Q1 expense outlook is driven by higher programming costs from new sports rights deals, while core operational costs are declining, and confirmed the sports rights deals are profitable.

Steven Cahall asked about TEGNA's M&A opportunities under a potentially more favorable FCC, the resulting impact on capital allocation strategy, and the expense outlook for 2025 given the absence of political revenue.

Answer

CEO Mike Steib stated that the regulatory regime needs reevaluation and that TEGNA is open to value-creating combinations, whether as an acquirer or seller. CFO Julie Heskett noted that while cost reductions in legacy operations continue, investments in Premion and sports rights mean the Q4 expense growth rate is a more realistic indicator for 2025, though no formal guidance was provided.

Steven Cahall from Wells Fargo Securities asked what subscriber and ARPU results are needed to achieve the back-half EBITDA growth guidance. He also asked for a follow-up on the ABS deal's impact on the company's future weighted average cost of debt.

Answer

CFO Marc Sirota reaffirmed the full-year outlook, stating they have good line of sight on improvement drivers like better subscriber performance, stable ARPU, and cost efficiencies, with the most significant impact expected in Q4. Regarding the cost of debt, Sirota highlighted the ABS deal's favorable pricing but emphasized the long-term objective is to reach a sustainable leverage level of 4.5x to 5.0x.

Steven Cahall of Wells Fargo Securities inquired about the expected EBITDA accretion from recently announced M&A deals, the potential risk to the 2025 net retransmission growth guidance, and the reasons for a soft Q3 core advertising outlook despite easier comparisons.

Answer

President & CEO Christopher Ripley stated that upcoming JSA buy-ins will contribute "tens of millions of dollars" in additional EBITDA at a purchase multiple far below one time. He also revised the 2023-2025 retransmission CAGR guidance down to "low single digits." COO & President of Local Media Robert Weisbord addressed core advertising, noting a tough environment but expressing cautious optimism for September driven by sports and recovering Tier 2 auto demand.

Steven Cahall of Wells Fargo asked for specifics on the potential timeline for FCC deregulation, Sinclair's M&A strategy in the interim, and the current state of advertising visibility.

Answer

President and CEO Chris Ripley expressed optimism for accelerated FCC rulemaking following the expected confirmation of a new commissioner, but stated that current rules already allow for M&A flexibility. He confirmed Sinclair will proceed with JSA buy-ins and station swaps. He also noted advertising visibility is limited to 4-6 weeks out, with COO Rob Weisbord adding that strong demand for fall sports provides some certainty for Q3 and Q4.

Steven Cahall of Wells Fargo Securities, LLC asked about the rationale for pre-announcing political advertising revenue given the subsequent miss, Sinclair's M&A strategy as either a buyer or seller amid potential regulatory changes, and whether Q3 marked the peak for distribution revenue growth.

Answer

President and CEO Christopher Ripley explained that the political guidance was based on historical trends that pointed to a higher number, but an unforeseen late shift of ad money out of Sinclair's markets occurred. On M&A, he stated Sinclair intends to participate as a buyer, seller, or merger partner to unlock value, facilitated by a more favorable regulatory environment. He also noted that with 28% of subscribers still up for renewal, strong retransmission revenue growth is expected to continue well into 2025.

Steven Cahall sought to clarify the underlying platform growth rate after excluding contributions from the Friendly acquisition and political advertising, and also asked for drivers behind the 51% platform gross margin guidance.

Answer

CFO Dan Jedda clarified that the underlying growth rate, excluding Friendly and political ads, was a steady 17% in Q2 and is expected to remain at a similar level in Q3. Regarding margins, Jedda explained that the 51-52% range is maintained by offsetting the mix impact from slower-growing, high-margin M&E revenue with operational efficiencies, noting that any rebound in M&E would represent potential upside.

Steven Cahall asked if the teens platform growth rate is sustainable long-term and questioned if the slight degradation in the Q2 platform margin guidance was due to a business mix shift.

Answer

CFO Dan Jedda stated he believes the teens growth rate is sustainable over the long term, even after accounting for tough comps. Regarding margins, he confirmed the slight downward revision in the full-year guide to 52% is due to a modest impact from a mix shift from guaranteed to non-guaranteed programmatic advertising, which he views as a positive for overall volume.

Steven Cahall asked about the impact of streaming services' ad-supported tiers on Roku's SSD revenue, whether the company is expanding its sales force for political advertising, and why the Q4 political ad revenue significantly surpassed prior expectations.

Answer

CEO Anthony Wood and CFO Dan Jedda explained that SSD deals are structured for Roku to win when partners win, accommodating shifts in pricing and tiers. Regarding political ads, CFO Dan Jedda admitted the strength surpassed expectations, while President of Roku Media Charlie Collier confirmed they did staff up and are already planning for future cycles, attributing the success to Roku's proven performance for campaigns.

Steven Cahall asked for the specific drivers of the slight Q4 platform revenue growth deceleration compared to Q3 and inquired about the overall growth outlook for the home screen, considering both M&E and non-M&E revenue.

Answer

CFO Dan Jedda explained the perceived deceleration is not like-for-like, attributing the difference to a $12 million 606 adjustment in Q3 and the fact that Q4 has only one month of political ad spend versus two in Q3. He and CEO Anthony Wood confirmed that the home screen is expected to grow holistically, as exceptionally strong growth in non-M&E brand advertising and new monetization methods are more than offsetting weakness in the M&E vertical.

Steven Cahall of Wells Fargo Securities inquired about the underlying performance of the creative business, the potential negative impact of consumer fragmentation, and the current penetration and financial benefits of outcome-based compensation models.

Answer

CEO Philippe Krakowsky acknowledged an industry-wide challenge for traditional creative agencies but clarified that a significant recent loss was in the healthcare specialty business. He stated the strategy is to integrate creative services with data and technology to prove value and shift towards outcome-based models, similar to media, where over 50% of contracts now have such components. He described the creative business as being in the "early innings" of this transformation.

Steven Cahall sought confirmation on plans for inorganic growth and its potential scale, and asked how the removal of R/GA and Huge from organic results impacts the full-year 1% growth guidance.

Answer

CFO Ellen Johnson confirmed the 1% organic growth guidance for the remainder of the year excludes R/GA and Huge and that the underlying business outlook is unchanged since July. CEO Philippe Krakowsky affirmed that inorganic growth has a role, with a focus on retail media tech and data assets, but did not specify a deal size and noted that Principal Media growth does not necessarily require M&A.

Asked about the drivers of the increased revenue forecast, investments in live production capabilities, and the potential for partnering with YouTube creators to gain market share.

Answer

Netflix executives explained that the revenue forecast increase is due to both favorable FX and underlying business strength in membership and ad sales. They are scaling live production capabilities through a mix of in-house development and strategic partnerships. The company is open to working with top creators from all platforms, including YouTube, to capture a larger share of TV viewing time, citing successful examples like Miss Rachel.

Steve Cahall of Wells Fargo asked about the drivers of the constant currency revenue increase, investments in live event production capabilities, and the potential for bringing YouTube creators to Netflix.

Answer

CFO Spencer Neumann attributed the revenue strength to healthy member growth and ad sales momentum. On live events, Co-CEO Ted Sarandos explained their use of production partners while building in-house capabilities, which Co-CEO Greg Peters noted have significantly improved. Sarandos also confirmed interest in top creators from any platform, like YouTube, to broaden their content offering.

Steve Cahall of Wells Fargo & Company asked about the opportunity to bring notable YouTube creators and their content exclusively to Netflix.

Answer

Co-CEO Ted Sarandos confirmed they want to work with the best creators from all platforms, including social media. He cited Miss Rachel as a successful example of a creator who works well on Netflix. Co-CEO Greg Peters added that while they compete with free services, they focus on winning the most profitable moments of viewing time.

Steve Cahall from Wells Fargo asked about the opportunity for Netflix to exclusively feature notable YouTube creators and their content on the platform.

Answer

Co-CEO Ted Sarandos affirmed they want to work with the best creators, regardless of their platform of origin. He agreed that while not all YouTube content is a fit, creators like Ms. Rachel have been highly successful on Netflix. Co-CEO Greg Peters added that while they compete with free services for viewing time, Netflix has a different, strong profit model and aims to win the 'most profitable moments' of a viewer's time, noting the vast majority of TV viewing is still on other platforms.

Steven Cahall asked about the launch timing for FOX 1, potential bundling opportunities, and the timeline and strategic considerations for exercising the company's option in FanDuel.

Answer

CEO Lachlan Murdoch confirmed FOX 1 will launch before the fall football season and will be bundled with other streaming services. CFO Steve Tomsic detailed the FanDuel option, noting they have until late 2030 to exercise it and are actively pursuing state-by-state licensing. He stated the decision to exercise is driven by completing the licensing process, not the 5% annual accretion in the strike price, given the option's significant intrinsic value of approximately $2.8 billion.

Steven Cahall of Wells Fargo Securities asked about the pricing pressure in digital advertising, particularly for Pluto TV, and whether management sees signs of it abating. He also questioned the potential risk to the company's affiliate reverse compensation revenue from recent FCC commentary.

Answer

Co-CEO Chris McCarthy acknowledged the digital ad softness due to new supply but expressed confidence that supply-demand dynamics will balance out over time, driven by strong engagement on Paramount+ and Pluto. Co-CEO George Cheeks defended the current affiliate model, stating the relationship is mutually beneficial and that changes would harm affiliates and viewers, noting the recent renewal of 60 CBS affiliates as a sign of strength.

Steven Cahall asked about the pricing pressure in digital advertising, particularly for Pluto TV, and whether Paramount sees it abating. He also inquired about the potential risk to reverse compensation affiliate revenue from possible FCC actions.

Answer

Co-CEO Chris McCarthy acknowledged digital advertising softness due to increased market supply but expressed confidence that engagement growth on Paramount+ and Pluto will eventually lead to improved monetization. Co-CEO George Cheeks described the CBS-affiliate relationship as mutually beneficial, arguing that changes to the reverse compensation dynamic would ultimately harm affiliates and local viewers by jeopardizing the high-value content CBS provides.

Steven Cahall inquired about the outlook for company-wide advertising growth in 2025, excluding the Super Bowl and political ads, and asked for an update on the current state and expectations for the content licensing market.

Answer

Co-CEO Chris McCarthy highlighted the transition to streaming, noting strong D2C ad growth and the insulating strength of CBS's lineup in the linear space. He expressed confidence in their momentum heading into 2025. Co-CEO Brian Robbins added that the licensing business remains strong and essential, with significant internal licensing supporting D2C growth, and sees room for innovation in windowing strategies.

Steven Cahall asked about the potential for deeper streaming integrations beyond simple bundles and questioned the accounting method for allocating content costs between the DTC and TV Media segments.

Answer

Co-CEO Chris McCarthy reiterated the strength of Paramount+ as a standalone service while remaining open to opportunistic partnerships. CFO Naveen Chopra explained that content costs are allocated based on the relative value of content windows, meaning as viewership shifts to streaming, a larger portion of the cost is allocated to the DTC segment.

Steven Cahall requested clarification on the drivers for the expected increase in 'other cost of revenue' and asked how the new Concorde Agreement will foster competitive balance among teams.

Answer

Liberty Media CEO Derek Chang explained that higher costs are due to partner servicing tied to revenue growth, Grand Prix Plaza activations, and other growth initiatives. Formula One CEO Stefano Domenicali detailed that the Concorde Agreement promotes balance through sporting regulations, the financial discipline of the cost cap, and the overall financial health of the sport's ecosystem.

Steven Cahall of Wells Fargo requested details on the drivers behind the growth in 'Other cost of F1 revenue.' He also asked how the new Concorde Agreement addresses competitive balance and supports the structure of second-tier teams.

Answer

Liberty Media executive Brian Wendling explained that increased costs are driven by partner servicing commissions tied to revenue growth and new year-round activations at the Grand Prix Plaza, which are offset by new revenue streams. Formula One CEO Stefano Domenicali detailed that the Concorde Agreement fosters competitive balance through sporting regulations, the crucial cost cap, and the overall financial health of the sport, creating a solid foundation for all teams.

Steven Cahall asked how the premium F1 TV product fits into negotiations with major streaming partners and inquired about team dynamics and expectations for the new Concorde Agreement.

Answer

Formula One CEO Stefano Domenicali explained that F1 TV is considered an "added value" and they are flexible in negotiations, citing a successful integration with Viaplay in the Netherlands as an example. Regarding the Concorde Agreement, Domenicali noted the dynamics are constructive as all teams recognize the sport's growth. CFO Brian Wendling added that they do not expect degradation in the team payment splits and anticipate being in a similar or better position than the end of the 2025 term.

Steven Cahall of Wells Fargo asked how the premium F1 TV product is positioned in negotiations with large streaming companies. He also questioned the team dynamics and expectations for the new Concorde Agreement, given the sport's recent growth.

Answer

Formula One CEO Stefano Domenicali explained that F1 TV is considered an "added value" and they are flexible, citing a deal with Viaplay in the Netherlands as an example of successful integration. On the Concorde Agreement, he stated the team dynamics are "very constructive," with all parties recognizing the sport's growth. CFO Brian Wendling added that they do not expect degradation in the economic split and aim for a similar or better position than the current agreement's conclusion in 2025.

Steven Cahall sought more clarity on why the Q4 subscriber loss should not be seen as the new run rate and asked if ARPU could be increased in previously aggressive markets without re-igniting competition. He also inquired about the extent of overlap with Optimum.

Answer

CEO Julia Laulis reiterated that Q4's results were impacted by specific, onetime headwinds and that the company now has proven, surgical tactics to drive connects, including a plan to compete with fixed wireless. On ARPU, she explained their market-by-market flexibility allows them to defend turf with price where necessary while growing ARPU elsewhere through value-added services. CFO Todd Koetje addressed the final point, stating that overlap with Optimum is minimal and that Cable One's network is already at the advanced level competitors are spending to achieve.

Steven Cahall inquired about Cable One's ability to return to a cadence of price increases and how it benchmarks its ARPU potential against peers who target consistent growth. He also asked if the competitive stabilization includes a slowdown in new fiber builds.

Answer

President and CEO Julia Laulis suggested that price elasticity exists, particularly at the high end and through value-added services, and noted that the company's historical ARPU premium was a result of a deliberate high-LTV strategy, which differs from peers. CFO Todd Koetje added that as larger players consolidate, their focus is less likely to be on building in Cable One's smaller communities, and that Cable One's value-segment customers offer future upgrade potential.

Steven Cahall followed up on broadband ARPU, asking if the historical 3-4% growth target is shifting as Comcast leans more into converged bundles with mobile. He also asked for clarity on the Peacock EBITDA outlook, specifically if the new NBA rights will be a net headwind in the second half of 2025.

Answer

CEO of Comcast Cable David Watson and CFO Jason Armstrong reiterated that the 'north star' is overall convergence revenue growth, which grew 5% in the past year. While bundling mobile could impact ARPU, they still expect 'healthy' ARPU growth and believe the competitive returns are worth it. On Peacock, President Michael Cavanagh stated that while they expect overall EBITDA losses to improve for the full year, it will take the full first NBA season to fully absorb the higher costs through levers like price increases and ad sales optimization. The NBA is expected to be a key driver of subscriber growth.

Steven Cahall asked about the mention of a potential streaming partnership with Paramount and whether it could involve a bundle. He also questioned if the observed link between Olympics content and broadband strength informs their strategy on acquiring NBA rights and keeping media and connectivity assets together.

Answer

President Michael Cavanagh responded that while Comcast is open to exploring streaming partnerships, the bar is very high and the details are complex. CEO Brian Roberts and Executive Vice President David Watson affirmed the strategic value of linking content and connectivity, noting the Xfinity platform drove significantly higher Olympic viewership in their markets, which serves as a powerful model for future major sports and entertainment events.