Daniel Kurnos: Yes. No, that’s fair. I think that’s a fair statement. Kevin, since you brought it up, this comes up from time to time. You brought up ratings, you brought up local news. I’m just kind of curious, either on an absolute or relative basis how local news in your markets performed.
Hilton Howell: You just read that paragraph then, Kevin.
Kevin Latek: We’re very happy with the ratings. As I said, we look at the trend lines, an aggregate basis of viewership of streaming, cable channels and broadcast it’s clear broadcast is pretty stable. Streaming is growing and cable is declining. And as you saw in our deck, for us, the strength of our ratings is local news, it’s local programming. And as Dan you’ve mentioned, we’ve been now leveraging our content with a new daily show called Investigate TV and a product that we’re now broadcasting in some markets called local news live. So we’re actually starting to take this really good content and leverage it and put it on in place of syndicated shows and are getting better ratings. So we think the audience is there and they’re certainly finding us. So we’re definitely comfortable with where our local news ratings are. They’ve been holding in, and we don’t see why we don’t see that changing.
Daniel Kurnos: Got it. No, that’s helpful. And Hilton since you’re maybe in a sharing mood and before Kevin kicks you under the table, how do you feel about political next year?
Hilton Howell: Well, I think it’s going to be huge. I think it’s — political is going to be absolutely huge. It is yet too early for us to handicap who the respective nominees of their parties will be. But regardless of that, we still are spending less on political advertising during a presidential year than Halloween Costumes or Easter Eggs. So I think that the future of political spending is huge. And regardless of the fact that there’s many avenues to reach people, the single best avenue is local new centered TV stations. So I think 2024 is going to be fantastic.
Daniel Kurnos: Alright, that does it for me. Thanks guys. Appreciate it.
Operator: Our next question is going to come from Nick Zangler from Stephens Inc. Your line is on.
Nicholas Zangler: Hey guys. High-level questions just on this charter Disney deal. Just love to hear your perspective on how quickly these MVPDs and other network streaming services will look to bundle together. And then specifically for Gray, are you more optimistic on the potential for reduced MVPD churn as you go forward? Or is it maybe the content curation that occurred specific to that deal that makes more room for spend to be allocated to Gray for the value you provide, which of those two are you more excited about in the near term?
Kevin Latek: Good questions. Give me a moment to think about that. I’ve been doing retransfer in cable programming previous before he came to Gray for a couple of decades now. I’d say it’s — in my experience, the pay-TV distributors have been eager to rationalize some spending for a long time. And that would mean more flexibility in what channels are carried, not simply carry every channel that a content creator dreams up and output every channel that’s streamed up on a basic cable tier and pay for it. And there has been some rationalization over the last few years of cable channels that have dropped have been wound down, etcetera. But it seems that the Charter Disney deal was a larger move on sort of rationalizing the number of cable channels, and we’ve seen in any single deal.
So that’s probably more — I guess, I’d say if I had a — probably a bit more impactful to the ecosystem. In terms of timing, it would just be my estimate that no distributor and content company is going to rush to do a deal terribly early. So as deals come up for renewal over the next couple of years, different — probably, there will be some new structures that will develop but that’s not going to happen sort of on its own. It’s going to happen as individual contracts between big distributors and big content companies come up over the next few years.
Nicholas Zangler: Got it. That’s very helpful. And then just 1 follow-up here. Assuming you’re able to gain incremental access to sports content, and it sounds like you guys might have a few things growing here. I’m wondering if your existing distribution deals are flexible such that as you add more content, you can immediately then command improved distribution fees or whether you have to wait until the next renewal to be rewarded for the improved content that you might be bringing to consumers. Thanks.
Kevin Latek: Sure. So at a fairly high level, contracts say that if we add content of a certain type, it would trigger a fee. So historically, if we were to add a big four affiliate whether we buy the station in a new market or we add an affiliate in a market that didn’t have a local affiliate, right? There used to be a lot of markets without a full range of network affiliates as we add one of those, it would trigger an additional carriage obligation and additional payment obligation. The sports professional sports is similar to that. And that as a general rule, if we add sports to a station, we’ve negotiated with providers that if we deliver certain kinds of sports and certain kinds of games and certain channels, it would trigger an additional or a higher distribution fee.
Generally, that’s typically the language in the last several contracts. There are some that don’t have that language, but those contracts are all coming up for exploration in the next 12 months. And given all broadcasters are seeking local professional sports, I would expect that all broadcasters and all distributors are having the same kinds of conversations about what triggers to include in their contracts, should local sports come to the local broadcast station.
Nicholas Zangler: Great. Very helpful guys. Thank you very much and good luck going forward.
Kevin Latek: Thank you.
Operator: Our next question is going to come from Alan Gould from Luke Capital. Your line is open.
Alan Gould: Thanks for taking the question. I’ve got two here. First, what are the financing options for Assembly? I mean, going on Hilton’s analogy to a local TV station, I don’t think you’d have an unleveraged TV stations in your portfolio. And then I’ll follow up with a question for Patrick, Kevin on CTV.
Hilton Howell: All right. Well, let me answer that. Gray paid for Assembly Studios, the old-fashioned way, we’ve paid cash. There is utterly no debt on that real estate development its own outright by the company. The initial investment came from funds we didn’t anticipate receiving during the dual Georgia Senate runoff a couple of years ago. And then we have paid based upon Jim’s prudent guidance, what we needed to do to build it out of our free cash flow every month. And those cash expenditures have essentially come to a close. And as I mentioned earlier, we start getting free cash flow from that investment about three weeks, certainly by the time we next gather on our call. And those cash flow numbers, while we cannot provide them to you directly will go up substantially when this strike comes to an end.
