So, you have to take those losses and multiply it by 75%. And then we get a tax benefit from those losses that at 26.5%, which also kind of bring down that number. So, when we are talking about our guidance initially, we are always quoting that on a free cash flow basis because that’s where we are focused. So, I would say we are still in that low-9 figures sort of strategy in terms of what we are thinking about. And I think you will continue to see those numbers. We have been very, very transparent about that and what those figures look like in our earnings release.
Perry Sook: I just want to add that look at the things that have happened since we announced the acquisition of the CW, the three separate writer strikes in Hollywood and advertising recession, if you will, or people that pull back on advertising as a result of those writers strikes, Live, NASCAR, WACC are all absolutely value creating, value-building acquisitions of content for this network. None of that was contemplated in the initial view of the CW. So, I couldn’t be more bullish on the CW, where we are and where we are going and what we have been able to do to acquire this portfolio of sports rights literally in the first nine months is pretty extraordinary. I think an extraordinary opportunity that I think we took full advantage of.
So – but obviously, a lot of things have moved around. The writers’ strike has Cox. The last purchase obligation we have from the former owners of content that we don’t believe is designed to make money. That now goes into next season because we weren’t able to exercise that this year and because the writers’ strike and aired out. So, there are a lot of moving parts, but I don’t think our view on the CW has changed. In fact, if anything, I am more confident given the content we have been able to put under contract in our ownership.
Mike Biard: Absolutely. And I will just say that these sorts of things take time, right. We make the investment in the content and then you have to sort of work that through the system, not least of which is on the distribution side, both with respect to the affiliated stations and also directly with distributors on our own and operated stations. That sort of thing is being manifested in the deals that we are striking now and in the deals that will be to come, and we won’t see the benefits of that until – at the earliest ‘24.
Perry Sook: And we absolutely see a path to profitability with this network. We are not going to name a month, a day and a quarter necessarily where that’s going to happen. But we said in the next couple of years here, we initially said by 2025, whether that moves a little bit forward or back, depending on these acquisitions, it will depend on how the economy does and how advertisers react and obviously, how the shows perform.
Barton Crockett: Okay. That’s very helpful. Thank you. Sorry for the background noise. But I appreciate your patience.
Lee Ann Gliha: Thank you, Barton.
Operator: Our next question comes from the line of Benjamin Soff with Deutsche Bank. Please proceed with your question.
Benjamin Soff: Hey guys. Thanks for the question. One of the consequences of the Disney Charter deal that you guys talked about was that it might help subscriber declines going forward. It’s still early, obviously, to see anything from that deal. But I am just wondering what your views are around the pacing of subscriber declines from here? And if you think churn can moderate in the next year or 2 years at the industry level or if you think it will continue at a similar pace from here? And then secondly, I apologize if I missed this, but can you guys parse out the impact in the quarter from the DIRECTV blackout? Thanks.
Lee Ann Gliha: Yes. So look, I think from an attrition perspective, we believe that the Charter Disney deal will help attrition – the rate of attrition with re-bundling that DTC package into the overall charter offering, we think should help avoid people trading. And then also, we think you are just seeing it, the DTC bundle of services is becoming more and more expensive as subscriber costs or subscriber costs are going up and up and up. So, we think that, that will also be beneficial to the MVPD universe. And that should help over time. I mean we will see how quickly that can sort of come through the ecosystem, as you probably know, these contracts come up only every few years, and so it may take a little bit of time for that to happen.
But we are very bullish on the ability for that to come into the future of the company. And then on the DIRECTV impact, we did parse that out on the call. Mike made a comment that said that in the third quarter, excluding the CW impact and basically assuming that we were – we took out from 2022, the same period of time that we were dark in DIRECTV and our partners were dark. We would have had distribution revenue that would have been up at 8.8% in the quarter.
Benjamin Soff: Okay. Thanks for the color.
Lee Ann Gliha: Yes.
Operator: Our next question comes from the line of Steven Cahall with Wells Fargo. Please proceed with your question.
Steven Cahall: Thank you. So, just more on the re-trans and distribution comments. I think you started the year with guidance of up high-single digit to low-double digit. And as you just said, some things happened in the third quarter that were maybe a bit more unexpected and extended by Disney Charter. And if I am doing the math right on the guidance for the fourth quarter, it would seem like that maybe excluding the blackout, you would pretty much be in the guidance range for the year. So, I am curious if that’s correct, and that would imply that you matter exceeded the rate increases that you were looking to achieve. And now that that’s done, I am just wondering if DIRECTV and Cox helped you kind of set the stage heading into, I think another major distribution deal in December.
