Good day, and welcome to Nexstar Media Group's First Quarter 2025 Conference Call. Today's call is being recorded. I will now turn the conference over to Joe Jaffoni, Investor Relations. Please go ahead, sir.

Thank you, Michelle, and good morning, everyone. We'll get to management's presentation and comments momentarily as well as your questions and answers. During the Q&A session, we ask that everyone please limit themselves to one question and one follow-up. I'll now read the safe harbor language, and then we'll get right into the call. All statements and comments made by management during today's conference call other than statements of historical fact may be deemed forward-looking statements for purposes of the Private Securities Litigation Reform Act of 1995. Nexstar cautions that these forward-looking statements are subject to risks and uncertainties, that could cause actual results to differ materially from those reflected by the forward-looking statements made during today's call. For additional details on these risks and uncertainties, please see Nexstar's annual report on Form 10-K for the year ended 12/31/2024 as filed with the Securities and Exchange Commission, and Nexstar's subsequent public filings with the SEC. Nexstar undertakes no obligation to update or revise any forward-looking statements whether as a result of new information, future events, or otherwise. With that, it's now my pleasure to turn the conference over to your host, Nexstar Founder, Chairman and Chief Executive Officer, Perry Sook. Perry, please go ahead.

Thank you, Joseph, and good morning, everyone. We appreciate you all joining us today. Mike Biard, our President and Chief Operating Officer, and Lee Ann Gliha, our Executive Vice President and Chief Financial Officer, are both with me on the call this morning. Nexstar's first quarter financial results marked a solid start to the year with net revenue, adjusted EBITDA, and adjusted free cash flow all benefiting from record first quarter distribution revenue and disciplined expense management. Before reviewing the highlights, I'd like to begin where I ended our last earnings call on a topic that remains a key strategic priority for Nexstar in 2025, which is deregulation. In today's competitive landscape where big tech and big media are afforded unbridled and ubiquitous reach, current restrictions on local broadcast ownership are outdated, arbitrary, and exclusionary, and no one can logically defend those rules. In my forty-five plus years in the industry, I continue to believe that the prospect of meaningful broadcast ownership reform has never been better than it is today. As chairman and CEO of Nexstar and in my role as chair of the joint board of directors of National Association of Broadcasters, our trade association, achieving deregulation is my top priority. We are fortunate to have a strong FCC chair in Brendan Carr who keenly understands the need for local broadcast deregulation and the relief that we and the industry need on both the national ownership cap and in-market local ownership rules. Once the fifth commissioner is confirmed, which could happen by early this summer, we anticipate chairman Carr will begin to take action on his agenda. In addition to our deregulatory agenda to level the playing field and to enable consolidation, we are also seeking to obtain a firm transition date for ATSC 3.0 and other services…

Thank you, Perry, and good morning, everyone. Nexstar delivered first quarter net revenues of $1,230,000,000, a decline of 3.9% compared to the prior year, primarily reflecting the year-over-year reduction in political advertising. Record first quarter distribution revenue of $762,000,000 increased by $1,000,000 or 0.1% over the comparable prior year quarter. Distribution revenue growth primarily reflects annual rate escalators and other contractual increases, growth in vMVPD subscribers, and the addition of CW affiliation on certain of our stations, which more than offset MVPD subscriber attrition. As Perry mentioned, approximately 60% of our total subscriber base is up for renewal in 2025. As the majority of those negotiations occur toward the end of the year, we would expect to see the benefit to distribution revenue beginning in the first quarter of 2026. While we continue to see subscriber attrition across the industry, recent earnings reports from our distribution partners suggest some marginal improvement in subscriber trends. We continue to monitor this closely, as we work to secure agreements that are better aligned with the value Nexstar delivers to our partners and their customers. Turning back to our first quarter performance, advertising revenue of $460,000,000 decreased $52,000,000 or 10.2% over the comparable prior year quarter primarily reflecting a $32,000,000 decrease in political advertising to $6,000,000 as well as a $20,000,000 or 4.2% reduction in nonpolitical advertising revenue due to advertising market softness. We continued to be impacted by a challenging television advertising market in Q1, with the most meaningful pullback coming from the insurance category. The automotive category saw declines at the tier two and tier three levels partially offset by growth in spending from Tier one OEMs. And the sports betting category, which faced a difficult year-over-year comparison given North Carolina's legalization of sports betting in 2024, and no comparable markets coming…

However,

our outlook for the year remains unchanged, and we continue to project improved profitability in 2025 versus 2024, with expectations of achieving profitability sometime in 2026. To close, let me reiterate our confidence in Nexstar's long-term outlook and the enduring strength of the broadcast business model. As Perry noted, amid dynamic economic and industry landscapes, more than 60% of our revenues come from subscription-based revenue streams, higher than many others in the media and entertainment space. We're staying focused on what we can control, executing our strategy with discipline to ensure we're in the best position to capitalize on the meaningful tailwinds ahead, including our upcoming distribution renewal cycle, the 2026 midterm elections, and the Winter Olympics. As the industry continues to evolve, we see the momentum shifting in favor of broadcasters and we remain committed to pursuing opportunities that drive long-term value for our shareholders. With that, it's my pleasure to turn the call over to Lee Ann for the remainder of the financial review. Lee Ann?

Thank you, Mike, and good morning, everyone. Mike gave you most of the details on the revenue side and on the CW, so I'll provide an overview of expenses, adjusted EBITDA, adjusted free cash flow along with a review of our capital allocation activities and some additional perspectives on our valuation. Together, first quarter direct operating and SG&A expenses, excluding depreciation and amortization and corporate expenses, declined by $9,000,000 or 1% primarily driven by our operational restructuring initiatives undertaken in the fourth quarter. Q1 2025 total corporate expense was $52,000,000 including noncash compensation expense of $18,000,000 compared to $55,000,000 including noncash compensation expense of $18,000,000 in the quarter of 2024. The $3,000,000 decrease is primarily due to lower legal expenses than the prior year. Q1 2025 depreciation and amortization expense was $205,000,000 versus $190,000,000 in the prior year quarter, an increase of $15,000,000. Of these amounts included in our definition of adjusted EBITDA, is $88,000,000 related to the amortization of broadcast rights for Q1 2025 compared to $69,000,000 for Q1 2024. The increase of amortization of broadcast rights by $19,000,000 was due to programming costs at The CW as newly acquired programming premieres. Please note that while Q1 CW programming amortization was up year over year, we do not expect 2025 CW programming amortization to be higher than 2024. Q1 2025 income from equity method investments, which primarily reflects our 31% ownership in TV Food Network, declined by $11,000,000 versus the prior year quarter, primarily related to TV Food Network's lower revenue. Putting it all together, on a consolidated basis, first quarter adjusted EBITDA was $381,000,000 representing a 30.9% margin, and a decrease of $71,000,000 from the first quarter 2024 of $452,000,000. Moving to the components of free cash flow and adjusted free cash flow, first quarter CapEx was $35,000,000…

Thank you. We'll now be conducting a question and answer session. Our first question comes from the line of Dan Kurnos with The Benchmark Company. Please proceed with your question.

Great. Thanks. Good morning. Also, nice job on expenses, Lee Ann. Perry, let me just look. Let's just ask one broad regulatory question. Let's say trustee hypothetically gets confirmed, I don't know, end of this month. You said summer. What would that mean for the timeline of when you think things start moving? And given all of the commentary we've now had, from Carr, we've got the Simonton op-ed now. Do we think an NPRM would be shortly forthcoming? Do you proactively test the market? And how much do you think the FCC can accomplish versus what has to go to Congress?

Sure, Dan. I don't pretend to speak or know exactly what's on the mind of chairman Carr. But I would think that an NPRM would be the most likely way to kick off a revisitation of the rules, both local and national, as they relate to ownership. So I would expect that could be one of the very first moves that the chairman could make. And I would anticipate there was a letter, as you know, delivered from house members to the FCC a couple of weeks ago. There's a senate letter being delivered today with 22 senators signing on urging the FCC to revisit and relax and eliminate ownership regulations as they relate to television. And there were also notably four public interest groups that historically have been on the other side of this discussion that endorse the need for ownership regulations. So the momentum in Washington continues. We had a board meeting there last week. Everything we heard from the administration and officials were that the path of deregulation I think, would proceed apace here once the fifth commissioner at the FCC is confirmed. As to what the FCC can do, I think they can do pretty much everything. You know, former chairman Ajit Pai felt that the FCC had the authority to modify or eliminate the national cap as well as the in-market ownership rules. We happen to ascribe to that rule, or that point of view. And so we think things could go pretty far, pretty fast. Obviously, any action that Congress would take would put whatever those rule changes were out of reach of judicial review, which would be nice as well. But I also think that the chairman has indicated his willingness to consider waivers during either dependency of rulemaking or waivers just in general. So I think you'll see all of those levers be pushed as time goes on this year. And I do think you'll see M&A activity come into focus as the year goes on.

Thanks very much, Perry. Looking forward to it.

Thank you. Our next question comes from the line of Steven Cahall with Wells Fargo. Please proceed with your question.

Thank you. Maybe first, just to follow-up on Dan's question and your comments there, Perry. So if we do get an NPRM, think there's precedent of deals being proposed under the conditionality of the FCC's new procedures under an NPRM. Are you comfortable sort of putting pen to paper and beginning to transact when the process is at that phase but maybe does still face some challenges in the courts? So that's just the first one as we think about that timeline. And then secondly, Lee Ann, I know you don't update EBITDA guidance as we go through the year. Overall, it seems like things are really performing pretty close to the trends that you had suggested when you gave the initial guide in February. So as we just roll everything up, you know, the ad market may be a little bit worse. Your expenses have looked pretty good. The CW guidance didn't change. So any meaningful puts or takes that you think we should be aware of in terms of how the overall year looks to be trending? Thank you.

Hey, Steve. You're right. We do not update the EBITDA guidance as we go. But as we go through the year, we will continue to give you kind of what we're seeing in terms of the current market environment. I think as we talked about when I gave the guidance, you know, the puts and takes really I think the key thing that we don't have control of are really what's going on in the advertising and what's going on with subscriber attrition. And so those are the two things I would have you sort of focus on with respect to any adjustments you want to make to your model as it relates to the guidance that we gave at the beginning of the year.

But I would say, Steve, that you're right that we have not seen and I get questions all the time. You know? Are you seeing things just fall off a cliff? And the answer is no. First of all, we talked in my remarks about the percent of our ad revenue that is determined by services advertising, which is really not dependent or even related to tariffs. And the amount that is tied to goods, whether it be automotive or furniture or others, which is a much lower percent of our ad revenue and a much lower percent than that of our total revenue. So our exposure is not anything that we would think would be extraordinary. Going back to 2008 when we were very highly dependent on advertising support, that was a different story. So I think that, you know, we were very, very in the guidance that we gave, and I think that things are unfolding pretty much as we had anticipated. You know, there might be puts and takes on the margin, but thematically, you know, things aren't any different than what we had seen at the time we gave the guidance than what we saw last year. And so we're not sanguine about it, but I think we're very, very clear-eyed about it that we think things are unfolding pretty much according to the guidance that we gave. As it relates to your question, would we be willing to put pen to paper during the pendant of an NPRM? I think, you know, again, depends on the circumstances and having a willing counterparty that was willing to do so as well. But I think you've seen this company take risk, acceptable risk, calculated risk, for an opportunity. So I don't think you'd see any change in our behavior as we move through this year and the deregulation of our industry.

Thank you. Very helpful.

Thank you. Our next question comes from the line of Benjamin Soff with Deutsche Bank. Please proceed with your question.

Good morning, everyone. Thanks for the question. As you guys talked about, we've seen the levels of cord cutting throughout the industry moderate again this quarter. I'm curious if and when you think that will start to show up in results for Nexstar if it hasn't already. And what does that mean for your upcoming slate of renewals later this year? And then appreciate all the color on advertising. I was hoping you could spend a little bit of time with what you're seeing more recently. And I believe in the last quarter, you talked about aspiring to get positive growth in that line for the year. Is that still a reasonable expectation? Thank you.

I'll take the first question on subs. I don't think we've seen a material change yet. I think the commentary around it has been optimistic, certainly coming from some of the MVPDs who've reported. And like others in the industry, we think that a rationalization of some of the MVPDs products out there can only provide tailwinds to those trends. Right? The rationalization, what I mean by that is the coming together of DTC with linear in ways that are more attractive to subscribers and make sense for really everyone involved. So in terms of impact on our results yet, we have not seen any. And as I said in the remarks, I think we're cautiously optimistic that we may see that play out in the rest of the year. In terms of the impact on our deals, really no impact. Right now, we'll approach our business the way we always do. Continue to believe that the value that we deliver to distributors and, therefore, to their customers continues to be underweight relative to our share of wallet, if you will.

And then, Ben, I guess, on the advertising side, you know, I think we're seeing what we said in the prepared remarks is our Q2 forecast at the current moment is very similar to what you saw in the first quarter in terms of the decline in nontraditional advertising or nonpolitical advertising rather. You know, with respect to the full year, you know, we do expect a pickup in the back half of the year given the elimination of crowd out.

Got it. Thank you.

Thank you. Our next question comes from the line of Aaron Watts with Deutsche Bank. Please proceed with your question.

On deregulation and consolidation, I'm just curious with in terms of your focus on the opportunities in the market, how would you prioritize between expanding your national footprint, increasing in-market duopolies, or perhaps bringing in assets that enrich your underlying Spectrum holdings? And on the in-market option, can you remind us what type of lift you get from creating a new duopoly in a given market or adding a CW affiliation to a market like you just did in Cleveland?

Sure. Let me try and unpack that a little bit, Aaron. I would say that, you know, our focus here is first and foremost on accretive acquisitions. Acquisitions that are more accretive than buying back our stock and whether that takes the form of in-market additional stations added to our roster or expanding our national footprint. Both have strategic importance to the company. I would say growing our national footprint has more strategic importance than adding a second or a third station in a market. If you look at our overall footprint today, we are duopolized or virtually duopolized in the majority of our markets already. The opportunities that remain to do that are primarily in the top 10 markets where we operate exclusively CW affiliates. So that would be interesting should there be actionable opportunities. I think that, again, underlying spectrum I think, you know, we are the largest holder of commercial television spectrum in the country. UHF television spectrum. And so, adding to that footprint is the byproduct of acquisitions. With rare exceptions, would we do a transaction just to acquire additional spectrum? You know, we're focused on the operating business up top. And the accretion from that. Vis a vis distribution, expense management, and, again, putting stations together in markets where we don't already have that opportunity. If the FCC were to eliminate the two-to-a-market rule, then, I think that opens up an even broader opportunity for us to look at in-market consolidations. And as it relates to margin lift there, it depends on the combination of stations. If you put two big four together, you're going to have the opportunity, I think, for cost takeouts aside from the payments to the networks, because you probably have two robust news operations, two robust production operations. And while our focus would be to preserve the journalistic layer there, there's no reason you can't take technical and production infrastructure and streamline that vis a vis automation. And, in effect, running two newspapers off the same printing press. So the margin lift there can be, you know, 20 points, 20, 25 points depending on the combinations and the status of the stations. In Cleveland, you know, adding a CW affiliation to an independent station gives us an immediate distribution lift in revenues and then taking a very powerful organization in which is our Fox affiliate in Cleveland a very good content operation and a very, very good sales operation. And overlaying that on the assets of the CW will give us, you know, lift long term down the road. But, the accretion of that acquisition is primarily through the distribution economics once it becomes a CW affiliate later this year. So I hope that's responsive to your question. I know there was a lot in there.

Really helpful. Thanks, Perry.

Thank you. Our next question comes from the line of Jason Bazinet with Citi. Please proceed with your question.

I also had a regulatory question. Is your sense that the industry that broad agreement among potential sellers, the consolidation should happen, and therefore, in your seat, you may have the choice of pursuing several different paths in terms of M&A. In other words, the short answer is yes.

I mean, I chair the NAB joint board of directors. And prior to that, I chaired the NAB television board. And this is the first time in history that the entire board voted unanimously that the National Capital Elimination and End Market ownership restrictions be eliminated. Hasn't always been that the case. But I think that is a notable achievement in the ability to get the industry organized under one set of marching orders. And that certainly is impactful at the regulatory agencies and on Capitol Hill that the industry is speaking with one voice as it relates to that issue. So I think that, you know, the NAB television board is made up of representatives. Mike Biard represents us on the NAB TV board, so a very large group. And there are very small market group operators that also have a voice on that board. And I think everyone realizes that without the ability for strategics to expand and potentially private equity to enter the space because of the regulatory nature, that there may not be much of a bid for their family assets or generational assets. So I think everyone sees the need for deregulation to allow the industry to reach its full value potential.

Can I ask one follow-up? And this may be too legal, but I'm gonna try. I heard your point about the FCC potentially doing waivers and about the NPRM. One thing that I don't know how to think about is I think it was last year the Supreme Court sort of pushed back on Chevron deference, meaning robbing the expert agencies of some of the power that they've historically had. And sort of forcing Congress to be more explicit about changes that take place as opposed to just pushing it down to an expert agency like the FCC to do the rulemaking. Do you feel that that shift at the Supreme Court is a potential fly in the ointment that would require congressional action as opposed to relying on the FCC as the expert agency, or is that sort of a red herring?

Yeah. Well, one man's opinion is it's a red herring. We actually read the Chevron ruling as a for industry, meaning that there could be judicial review of regulatory agency sanctions that they couldn't just happen in a vacuum and that there could be a question for the need of those. And so we see it as a positive. I don't see that as a red herring, necessarily. I think the entire administration as well as both houses of Congress certainly are focused on streamlining government intrusiveness into private business. And so I think that at this point in time, I don't see that as an impediment. And in fact, there's been very little this point, reaction to the Chevron ruling as it relates to the day-to-day operations of businesses and the government. So from our perspective, I don't see that as an impediment on a going forward basis.

I would just add to that. I think the letters that you've seen from both houses of Congress would indicate that the legislators are encouraging the FCC to act as well. So, certainly, they don't see the FCC as being limited here.

Thank you very much.

Thank you. Our next question comes from the line of Patrick Scholl with Barrington Research. Please proceed with your question.

A question on the ad market. You mentioned the growth in the services sector in the last trade war. I was just kind of curious, how much of that was increased penetration of getting new advertisers onto TV? And just, you know, within the various service categories where you feel TV is relatively underutilized from those advertisers. Thanks.

I think the, you know, from the last 2018, there wasn't really, like, new advertisers that were coming on. It was just sort of our same group. It was just, you know, continuation of the trend of the benefits of advertising. Right? These are companies that are really bringing the cash register because someone has heard their ad and they came into the store or they hired, you know, hired them to, you know, with for their lawsuit, you know, whatever that was. And so it's a very stable piece of the pie and a nice, you know, it's nice from our advertising composition perspective to be, you know, the significant percentage of our ads. And I think this time, you know, this time go around, it's really no different. I mean, we're seeing, you know, a definite difference in terms of the, you know, rate of decline of goods versus the services category.

Significant.

Thank you. Our next question comes from the line of Barton Crockett with Rosenblatt Securities. Please proceed with your question.

Hi, great. Thanks for taking the question. I guess, if I could too, but the first one is really on this regulatory question. So I get the FCC, but I'm wondering about the DOJ and antitrust. How much of an impediment could that be? And then kind of within that question, you know, historically, I think there's been this very reasonable thought that they should include in the market definition these things that have been, you know, accused by the government of monopoly, like search, and social, does that need to change? Do you see any prospects that that could change? Under this administration?

Yes. In one word, the folks that our GR team has spoken to at DOJ have said have not gone on record, but have said in private conversations that no one can defend the current rules that television station advertising is a discrete market as is radio station advertising. Nobody believes that. Nobody can defend that with a straight face, and so I do not see that as an impediment to in-market opportunities to consolidate. Let's just assume you have 50% of the television revenue in a marketplace. But let's talk about the part of the iceberg that's below the water level, which is every other form of advertising that our local sellers compete with. You know, there's a line out the door at the car dealership or the furniture store. People in to sell, you know, digital advertising, connected television advertising, pens with your company's name on it, you know, out of home advertising, billboards, so, you know, ads in the high school yearbook. I mean, those are all compete for the one advertising budget that business owners have. And to believe anything other than that ignores the realities of what our salespeople encounter in the marketplace every day. So, again, you know, pretty high up the food chain at the DOJ. I think people understand that and are willing to address marketplace realities in transactions that might be proposed going forward.

I'll just add that to the extent that you thought that rule or really not a rule, but that interpretation of the marketplace made any sense historically. Certainly, changes in the marketplace recently would really undermine it. What I mean by that is introduction of advertising television advertising in particular, across Netflix and Amazon Prime. I think you can look at those and that flood of inventory that they brought to the market has a fundamental change in the marketplace that absolutely should compel a different view of that.

Now if I could ask kind of an adjacent question. You know, to what degree in, you know, Nexstar specifically in local television generally, is this, you know, emerging kind of form of programmatic and connected TV advertising that's part of what Netflix is doing and just a lot of momentum around that generally that we see at the national networks. I don't really hear you guys talking about that locally or see it that much. And to what degree is that kind of change? Should it change? Can it change?

Well and, again, I don't want to open our playbook so everybody can read it. But, I mean, we certainly are cognizant of the fact that the vast majority of advertising, all digital all national advertising is sold on an impression-based basis. And here is television selling demography. And so I think that, you know, we are at a forefront of having discussions that would enable us to be selling more of our inventory on an impression-based basis. We can control the rate at which those orders are accepted. And all of that. But it also listen. Advertising agencies make less money placing linear television ads than they do placing digital ads. Until we address that structural inequity, you know, it's gonna be hard to talk about sustained growth in this business at the advertising support level. So we're totally cognizant of it and focused on it, and discussions are ongoing behind the scenes. And, obviously, if we have something to announce, we'll announce it. But we are focused on creating removing all structural impediments and any other impediment in doing business with our company. And in our industry, I think that's where everyone should be focused. So we get it and are taking moves to evolve the way we sell our advertising to be as compatible as possible. Everyone understands the superior value proposition. But if it's hard to buy and less profitable to buy, we can understand why people may move their money in other places. So we're straight up addressing it ourselves and expect that the industry will ultimately follow.

Okay. Great. Thank you.

Thank you. Our next question comes from the line of Craig Huber with Huber Research Partners. Please proceed with your question.

Great. Thank you. I wanted to ask you, Perry, about this proposal this op-ed out there about capping reverse retrans at 30% of retrans revenues for your companies and stuff. And we sort of think about it. I want to hear your comment on this if you could, please. We've been talking about for years and years about deregulating your stuff out there in market rules, a 39% ownership cap. And all of a sudden now, there's this potential out there of a 30% cap on the reverse retrans side of things here. I mean, when I sit back and think about the FCC, the Trump administration, Congress that they got involved here, they're either deregulatory leave us alone, or they're not. I mean, why does it make sense to get rid of the 39% ownership cap, which I am sympathetic with in the market rules, certainly on board with that as well? But then why put in place a cap on the retrans payment side of things here? There's surely benefit you guys on the surface, but there's an unintended consequence there, I think, because the networks I would think, logically, would just pull back how much money they spend on programming that they put on your TV stations, your peers out there and stuff. So can you just comment on that? Because it seems totally inconsistent. To me. I'm just I'm baffled by the whole thing, frankly.

Well, listen. We have a great deal of respect for commissioner Symington and his approach to free markets and deregulation. I would say that his thoughts were expressed in an op-ed which I would characterize as one man's opinion. I will tell you, having spent I think I've been on Capitol Hill seven times so far this year, there is very little interest in getting involved in the commerce between stations and networks. Other than there has been an increasing interest in the asymmetrical approach to virtual MVPDs and traditional MVPDs, given that, you know, YouTube now promotes themselves as the third largest MVPD, but yet they're a virtual. So our rules of engagement are different, and I don't think anyone feels that that makes much sense. But, listen. You know, we are the largest affiliate groups and among the largest affiliate groups of all of the big four. We happen to own the big five and, you know, would not be handcuffed by a 30% rule should it come into effect in terms we aspire to 30% distribution revenue for the CW from our affiliates. But at this point in time, I think there'll be very little traction for that taking hold. So I would take it as, you know, the op-ed that it was. But I don't know that I see it gaining much traction in Washington or in the marketplace.

And then thank you for that. And then, Lee Ann, if you could just comment, if you would, on the CW losses year over year in the first quarter. Was it ballpark maybe roughly $10,000,000 worse than the first quarter here because of the higher sports program that I understand? And what is your outlook, if you could quantify that, what your outlook is for the CW losses for the full year? Thank you.

Yes. Our outlook for the CW losses for the full year are consistent with what we said on the last call, which was about a quarter better or 25% better than what it was in 2024. We did see, you know, an increase in the average amortization of broadcast rights in the first quarter, which was about a substantial increase over the first quarter of 2024. You can see that number. And the losses did increase by, you know, more than $10,000,000 in the first quarter. But, again, that's an anomaly of seasonality anomaly, and, you know, we still are on track to kind of get where we think we're gonna get we had planned to get to for the full year.

Great. Thank you both.

Thank you. Our final question comes from the line of Alan Gould with Loop Capital Markets. Please proceed with your question.

Thanks for taking the question. Two, please. Perry, speaking of the Fifth Network, just wondering where you stand in repricing your CW fees to your station partners, your affiliates. And secondly, on advertising, just curious how big a difference there is on your advertising your sports product versus your news product versus your general entertainment product. Thank you.

Well, listen. We're working on our value proposition to our CW affiliates. And, you know, the way we do that is by demonstrating the value of the CW affiliation through investment in programming, and most importantly, that programming paying off in terms of increased eyeballs to the network. Our affiliates are over the moon at our investments in sports programming, what it brings to them. These additional inventory that they don't have to program. And so, you know, our discussions with those affiliates as well as our own station group, which is the largest customer of the network in terms of we are the largest CW affiliate group. People recognize the value we're bringing, and now it's, you know? And we told them it was coming. And so they've had a couple of years now to get out in front of that with this distribution negotiations on their own behalf. So I do expect that one of the value levers to break even of the CW affiliation the CW network over the next two years, '25 and '26, will be through increased remuneration vis a vis distribution payments to the network from its affiliate base. So, it's an ongoing process. You know, when we first took over the network, we said all the great things we were gonna do and asked for big increases. And they said, well, wait a minute. You haven't done anything yet. That's fair. Now we have, and I think now it's our turn. And as it relates to the second part of your question, I forget what that was. Can you remind me again?

Sure. When you're selling advertising, how big a difference are you seeing selling advertising on sports content versus news content versus general entertainment content?

Well, I would probably put them in that order. Right? I mean, sports programming is of the moment right now, and that's why we added additional sports programming. There's a big demand for sports because it's live. It's lean forward. I would say, you know, as it relates to demand for local news, we've seen no effect in that. I mean, that is where local advertisers want to be for all the same reasons. You're talking about my local community. People are interested in that. My ads get more attention there. And I would say that, you know, unfortunately, because we produce some very good scripted programming, that's third in the batting order. That's not, you know, generally consumed live. It's consumed, you know, by appointment whenever I'm ready to see it, you know, through a streaming or on my DVR. And so that is probably the least in demand of the three categories that you talked about. And if you look at the mix, you know, from a network perspective that we've orchestrated at the CW, you know, scripted entertainment programming comprises a lower percent of the total hours of prime time and total hours programmed by the network. And I think it's in addressing that marketplace reality. So it wasn't just to cut cost. It was to mirror more what the television audience is looking to consume, which is live programming, event programming, and sports programming. We still have a healthy, you know, we will have on the network in this upcoming season a Dick Wolf police procedural. That's kind of a watershed event for the CW when you think we're in business with one of the most prolific and successful program producers, you know, in television. And I'm excited about that and, you know, both hope and think that that show will do well. But we're not abandoning scripted. We're just evolving the programming mix to represent marketplace realities. I think if you look at, you know, right now, Wednesday night is a scripted night, and Friday night is pen and teller night. And Tuesday night's wrestling night, you know, with WWE. And I think that, you know, thematically, that's how we're, you know, Brad Schwartz and his team and Sean Compton are building the network. And we think that it will over time pay significant dividends to both the network, the affiliates of which we're the largest, and our counterparties as well.

Okay. Thank you.

Thank you. We have reached the end of our question and answer session. I'd like to turn the call back over to Mr. Sook for any closing remarks.

Thank you very much, operator. In closing, Nexstar's local advertising, our political advertising, and our distribution revenue streams all provide us with a stable and growing foundation across all economic cycles. Our uniquely scaled portfolio of local and national media assets continue to generate substantial free cash flow to support our value-enhancing capital allocation strategy that Lee Ann described earlier. With our proven financial track record, our best-in-class balance sheet, and additional upside from potential regulatory reform, we believe that Nexstar offers a rare combination of consistency, flexibility, as well as growth. Simply put, we have the platform, the people, and the momentum to continue to deliver long-term shareholder value. And as Nexstar's third-largest shareholder, I might add, no one is more personally committed to that mission than I am. Thank you all for your continued support, and we look forward to updating you again on our second quarter earnings call in August. Have a good day.

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.