Hilton Howell: Thank you, Steven. All right. Kevin, do you want to start?
Kevin Latek: Yes, Steven our network affiliation agreements are up on the following schedule. We have ABC up at the end of this year. We have CBS and Fox up in the second half of ’25, and we have NBC at the very end of ’25. There is not really not aware of any precedent where network and affiliate group have opened a negotiation early and changed the terms early. We’ve done — at Gray we have done countless negotiations with the networks. Typically, we buy we buy something with an earlier expiration date, and we’ll add years to other markets so that they all have a coterminous end. So we don’t reopen the existing contract. We live with whatever contracts exist until they expire. And then we roll into — has been negotiated either recently or sometimes two or three years in advance.
Where we are now is, we are not acquiring anything. All of our stations are on the same schedule with all four networks. We will likely talk with CBS and Fox a year from now. So I think there’ll be a lot of other broadcasters who will be talking to all the networks before we will. And we would expect that all broadcasters, including those [alone] (ph) — the networks are very aware of what’s happening with cord cutting, and we’ll be adjusting the programming fees to reflect where we [trans] (ph) this add and the exclusivity of the content we’re receiving. But we are not — I don’t anticipate us other than ABC at the end of this year having any conversations on any changes to our existing contracts until those contracts are over. And again, that’s not until the second half of ’25.
Hilton Howell: Pat?
Pat LaPlatney: Yes. So Steven, your question around National, we had a good quarter in the first quarter for National. There were a number of categories that I think contributed to that, one that I’d point out would be consumer goods for us, which was up high-single digits. Look, National for us is a much smaller piece than local, which we have more control over. But at the end of the day, you’re going to see National, it’s going to be a little bit lumpy, but this quarter was a very good one. And I think it’s due in large part just from a sort of a broad number of categories that happen to be up in Q1.
Hilton Howell: And Steven, I guess on the last one here. So let me say that I read everything that you write, and I appreciate every comment that you have — some of which I greatly differ with, but I appreciate every word you write. That being said, we’re going to do it the way great as everything else we execute. And it’s really simple. But we don’t intend to sell any assets. We see no panic. We are not concerned. We will operate our TV stations and our other assets, and we are generating a huge amount of free cash flow. And we will use that to deleverage the company. We have no intentions — our Board has not even considered cutting the dividend nor picking anything. Some of our competitors may have chosen to do so. Each company is their own best guide in that regard.
Gray, as this quarter’s results, I think, demonstrate is a stunning company. We have spent 30 years assembling some of the finest assets and the people around this table and talking to you today represent one of the greatest in my judgment, media companies currently operating. And I think our results demonstrate that. So what we’re going to do is go to work every day. We’re not going to sell things. We’re not going to blink and we’re not going to panic. And we’re just going to reduce our debt, just like we’ve done for the last 30 years. We moved our debt ratio to what we considered to be as high as we would ever like it to be due to the opportunities to acquire both Quincy and Meredith, and that completed a remarkable footprint for our company.
And now we are enjoying the fruits of those efforts. And so we’re just going to carry on, and that’s all there is to it.
Operator: [Operator Instructions] The next up, we have Craig Huber. Your line is now open.
Craig Huber: Great. Thank you. I wanted to ask about the Assembly Atlanta project here. I mean, I think last call, you guys talked about how the revenues are starting to generate off that got delayed because of the Hollywood strikes and stuff. Maybe just update us on your thoughts on when you think you full revenues will start coming through? It sounds like a 2025 event. That’s my first question and I’ll take the second one after that, if I could please.
Hilton Howell: Sure, Craig. This is Hilton. Let me see if I can answer that for you. Obviously, we have a long-term lease with the Universal Production Services division of Comcast, NBCU. And what that effectively create a financial 70% occupancy rate for all of our studios. The other 30% of not only assembly but third rail studios, which are two separate businesses, but all operated together have always been producing, but we have had a lag in commitments. And what everyone has told me, it is because of the lack of actually getting greenlit due to a potential [IRC] (ph) strike. By the end of the month of May it is my understanding that — that issue will either fully matriculate or it will go away. And I think once that happens, I think we are going to have a great boom in terms of what we are doing because the only issue that we have is getting TV productions that are getting quotes left and right, getting greenlit from Hollywood.
And so I think, that green light is going to come. And I think it is just a matter of time. In the meantime, we’re in a remarkable position. We’ve got, I think, about four production shooting currently. And our reviews from people using our studios have been superb. And so I anticipate that we will see a more fully leased out 100% sometime during the course of 2024 and then it will carry for, obviously in future years.
Craig Huber: Great. I appreciate that. And my other question, if I could ask just longer term here. You guys have plenty of broadcast spectrum, of course, and with the continued rollout of ATSC 3.0. Just curious, when do you think you might start being able to monetize that to some degree. Once we start seeing somewhat of some material revenues off that? And I assume the whole thing maybe late this decade, but just maybe talk about what you’re kind of doing on that front, the extra spectrum you have? Thank you.
Pat LaPlatney: Yes, it’s Pat. So I would say that we’ll start seeing revenues probably first quarter of next year. In terms of material revenues, it is a little bit difficult to forecast. It will be a matter of years. I’m not certain it will be the end of the decade though. I think it will be sooner than that. So although I can’t give you a hard and fast number there, but we will start seeing money next year. And I think in a few years, the money will be meaningful.
Operator: All right. Next up, we have James Goss. James, your line is now open.
Jim Goss: Okay. Just one thing following up on what you just said, what sort of monetization efforts do you think can be made with NEXTGEN TV? How will it come into play, do you expect?
Pat LaPlatney: Yes. So there is a number of different areas. One of the sort of primary is digital data delivery. So getting data into automobiles, taking data that gets offloaded from the [cellular] (ph). There is a number of conversations that have been going on in that area for years. I think that will probably be the first. But a little longer-term, the new 3.0 standard gives us the ability to target ads, which can be a game changer if all of our current impressions on linear television, we’re targetable, that really changes the paradigm for local TV. And ultimately, that’s where 3.0 leads us. It is going to take a little bit of time — but we’ll get there.
Jim Goss: Okay. And there was also a discussion earlier about fast channels and connected TV offerings. What sort of economic model are you pursuing along those lines?
Pat LaPlatney: It’s an ad sales model, Jim. And while it is a small number today, we expect it to grow dramatically as we roll out more of our stations on the fast platforms. So we are in the early stages of rollout right now. And as you might guess, the more stations you roll out, the higher the revenue and a rollout period is going to grow quicker than it would in a sort of a static period. So we would expect that, again, a small number today to grow significantly over the next few years.
Jim Goss: Okay. One last one. Jeff mentioned and welcome Jeff — that Wall Street sort of misunderstood the Sports JV impact. And I wonder if you might expand on that a little bit. What do you think was the nature of the misunderstanding and please clarify what we should understand about it.
Kevin Latek: Do you want to take –.
Jeff Gignac: Either one of us — I mean I’ll start and Kevin can correct me. But look, look, the Sports JV when it was first announced, there were very few details about what it meant as it relates to the existing distribution channels and who it was targeting, et cetera. And so the — if we are — if it is another avenue for us and another MVPD, virtual MVPD using our programming, that should be a positive for us. So that, I think, is the crux of why I use the term misunderstanding on it because it was declared as the latest way that we’re going to get disintermediated and in fact, it should help us to be part of the plan going forward.
