Nexstar Media Group, Inc. (NXST) Earnings Call Transcript & Summary

Welcome, everyone, to Bank of America's Media Communications and Entertainment Conference 2023. Our pleasure to have with us on stage. Well, first of all, I'm Brian Fenske, the TMT sector specialist here. It's my pleasure to introduce to you for the second year in a row here, Nexstar Media Group. Today, we have with us Tom Carter, a 14-year veteran and Nexstar, former President and COO of the company, who recently announced his planned retirement and transition to Senior Adviser to the CEO and Board of Directors. And also company CFO, Lee Gliha. So welcome, and thank you for joining us.

Thanks for having us.

Thanks for having us.

Of course. So as we started developing these questions in advance of this the narrative changed on us. So it felt like we were going to be sitting here and Disney and ESPN was still off the air, and they've obviously reached a settlement or a negotiation. So I'd love to just kick off with what that could have meant and maybe what some of the interpretation of this agreement and the fact that it was settled so quickly, if you will?

Yes. I think we saw our stock take a hit as a result of the charter Disney dispute, and it's now on its way to recovery, but we definitely think that the outcome was good for us from a broadcasting perspective. I mean at the end of the day, what ended up happening. The premier programming stayed got paid. The DT services are now actually being looped back into the bundle and the lower rated networks got rationalized. And I think all of this supports our business model. I think there were some questions about how does this impact broadcast at ABC. The conversation about the broadcast model in ABC was actually very, very limited. I don't know if everyone is familiar, but with respect to the broadcast networks, they enter into affiliation agreements with station groups and air their content like us. And then we have the right to negotiate with the MVPDs. So with respect to this Disney charter conflict, they really have the smallest O&O station footprint of any network out there. They only have 8 stations. So the discussion about ABC was actually limited to that. And obviously, that got renewed. We also feel like the other thing that's interesting is that the broadcast networks, we actually overdeliver for the MVPDs. We're the most watched stations and networks, and we're proportionately paid less relative to our ratings. Like so for example, when this all happened, I said to our ratings guys, can you actually go back and pull for me, for all of 2022, 24-hour ratings on average, 7 days a week for the national content. And what came back was the top 4 broadcast networks generate the most viewership. They actually generate 4x more viewership than ESPN, which is the seventh rated network. So if you think about the importance of that programming, it's very important. And we get paid less for it. Broadcast networks, in general, get paid about 26% of the total pie of retrans and cable affiliate fees, but we generate 40% of the viewership. We're actually the cable company's best investment. We return very well for them. And on top of that, the other piece I point out I just want to make is that our local broadcast affiliates really provide valuable local does and other content. So at the same time, I asked the ratings guys to go back and give me that broadcast those network ratings. I said, can you go back and look at just our overall station group over the last 12 months, how much of our viewership is from network content versus Nexstar content. So our local news, our syndicated content. And the answer was, for the last 12 months, our nonnetwork content was 45% of our viewership. So go take those broadcast numbers and then double them because that's what we're providing to our customers. So we think because we're the most popular networks offering the majority of the NFL content in our local news and other programming that we are going to be successful, continue to be successful with our MVPD relationship. So our content has continued to be offered on the most basic tier because of that. And on top of that, we're not competing, like Disney with the MVPDs. We don't have our own DTC platforms or we're not making our content less exclusive by putting on other platforms more cheaply. We're invested in the health of the ecosystem. And then to make it really clear, we did about 50% of our subscriber renewals towards the end of 2022. We did our ABC deal at the end of 2022. So and all of that has been business as usual. So we feel like we're -- we've got good visibility and good reason for our business to continue and the way that it has been. And we don't really see this conflict being anything but somewhat positive because now I guess what, DTC is back in the bundle where probably it should have been.

Excellent. Now while we're on the topic of DTC, that obviously became a focus of the major media companies over the last few years. We've seen it be quite destructive to the free cash flow of those companies. You guys have always been somewhat of a free cash flow machine. So one, how do you think DTC plays out and how do you guys participate, not participate, compete in that DTC ecosystem? And do you suspect that these larger media companies are going to back away from DTC, lean into linear business, where they historically generate lots of free cash flow as well?

Yes. I mean, look, I think our point there is if you look at the major media companies, Fox, Comcast, Paramount, Warner, Disney. Almost 80% of the revenue comes from linear and all of the profit comes from linear. There isn't any DTC product out there that actually makes money. And so we think that this will incentivize those media companies to lean back into linear. And you're already kind of seeing that. You're seeing price increases that are happening on the basket -- on DTC services. Now a basket of DTC service is actually more expensive the average cable bundle. And I think the other piece of it is half of the video revenue that is -- that these companies generate is from distribution which is supported by the MVPD companies that generate almost half of their residential revenue from video services. So there's just an entrenched reason why linear needs to continue to exist. But that doesn't mean that DTC is going to go away. We think it will coexist. I mean the interesting thing that we point out and we see this with our CW app is that there is a younger audience that's on these DTC platforms. And it's almost nonexclusive, right? You've got 2 other duplicated, different audiences, the younger audience here and older audience here. And so we do feel like you probably -- you may need both going forward, and we don't have any problem coexisting. We've coexisted with lots of other video services for many, many, many years. And at the end of the day, the largest and most distributed audience is the broadcast audience. And here's where I'm going to just take a minute, sorry, but I want to give you guys my broadcast virtuous cycle pitch because this is against the MoffettNathanson article that came out of the charter of the doom loops, I've got our broadcast virtuous cycle, which is, one, our content is already the most watch content. Broadcast has the broadest reach of any medium. We reached 76% of the population on a daily basis. Sports teams and leagues want to be on broadcast. They want to reach the most people. They don't want to alienate fans. They want to create more health of their franchises and grow that value. NFL is a perfect example of this. And as a result, pay TV providers are going to continue to carry and pay broadcast networks because it has the key sports and news content that audiences want. And then viewers will continue to subscribe to pay T services to access the content in an easy-to-use interface, and that virtuous cycle will continue. So I think that -- to answer your question, I think we'll have some rationalization will continue to coexist, but broadcast will continue to thrive as it has for many, many years.

And to just clarify something because the word linear sometimes has a negative connotation these days because just some people's mind goes to that's legacy sitting back in a couch, watching TV like my parents did and New Media is DTC. But I think what you're saying is linear is kind of the old distribution model. It's intelligent. It's still going to have apps, its still going to have websites and streaming. It's just not going to be do it alone. It's going to be do it with partnerships with PPDs.

Absolutely.

That's great. That's really helpful. So a number of media companies, including Disney and Paramount have engaged in processes or talked about potentially selling or reconfiguring their asset portfolios. No major news has hit yet, but it's certainly a topic our Jessica Reliford has written extensively about. Since M&A has always been a clear driver of growth for Nexstar, how do you see your company potentially participating?

Well, we think that there could be some opportunities depending on, as you say, how it really falls out. I think all of these companies, Disney included, have shareholders to answer to for these massive amount of investments in the massive free cash flow that they are reinvesting in direct-to-consumer that may make some of the linear assets as we just talked about available. But it's interesting, and I know that Disney had talked about it this way, let's kind of morph into a growth Co and a sustainable Co, if you want to think about it that way. The only issue is, the sustain Co is funding the growth Co. And if you sell one, you've lost access to that cash flow. Now granted, you're going to have proceeds, but is that really what you want to do and how you want to fund that with a onetime sale versus correcting. So -- and but to your point is right, we spent the better part of the first 10 years, I was at Nexstar in an acquisition mode. We made over 40 acquisitions in 10 years. A couple of them were sizable where we more than doubled the size of the company and we did it with largely debt, but those weren't massively accretive. The Media General transaction was 40% free cash flow accretive. And the Tribune acquisition was 60% free cash flow accretive. That's work worth doing. If those types of opportunities present themselves going forward, whatever it is, I think you'll see us take a look at it. But more specifically to those assets. A lot of those assets, the linear and the DTC assets are intertwined. From a programming perspective and from a content perspective, you're seeing ESPN simulcast the majority of their large sporting events on ABC. If you were to buy the ABC complex, how would that work going forward. So there's a lot of questions that need to be answered there. But it's something...

Have you got the regulatory limit yet for station acquisitions?

We are, but that would not preclude us from buying stations because as Lee Ann rightly pointed out, ABC's portfolio of stations is modest. It's only 8, largely in the top 10 markets. We're in 8 of the top 10 markets already. So we could -- with a CW station, we could buy a second station in that market and not increase our household footprint. There may be a few stations that would require divestiture or either of a Nexstar station or an ABC station, but we could onboard those with relatively little friction.

Got it. Okay. extremely interesting. Switching gears here...

I don't know if there's a deal to be done there right? Because I think they've got to be a little bit clearer in their own thinking with regard to how that goes because we can take direction, but we're not necessarily out there leaning into any of this stuff without a clear path.

Understood. So yes, switching gears a little bit. You have an ongoing dispute with DIRECTV.

So I'm told.

And where you've taken down your stations from their service since the start of July. Any update you can provide on this key sticking points, asks? And how are they -- what are they thinking?

All good questions. Not all of which I can or will answer in a public forum. But you're right. I mean, the first month or so, we were in blackout with them. There wasn't a lot of movement going on. We've been in pretty constant contact over the last several weeks. Progress has been made. We don't have a deal. We're not going to do a bad deal. But I think our expectation is that we will reach an agreement at some point. hopefully sooner rather than later because everybody agrees it's not in anybody's best interest to alienate the consumer.

All right. Okay. Thank you. A point I wanted to get to is your view on capital structure and leverage and use of free cash flow. You -- as you said, you've intelligently used debt when we were in a very low rate environment to make these incredibly accretive free cash flow deals so I'd love to just hear some commentary because I think you guys have been very thoughtful about use of the balance sheet.

Yes. I mean, look, from a leverage perspective, for the last quarter, we were at 3x leverage. We don't feel like we're in any situation where we're overlevered. We also don't necessarily feel like we're under-levered. We've been -- as a result, then we've had the flexibility to use our free cash flow to fund our dividends, to make some -- a few small acquisitions. We did a small station deal earlier this year. And then do you use the balance of our cash flow for share repurchases because we feel like our stock is incredibly undervalued at these levels.

Especially at these levels.

Yes, absolutely. And I noted that earlier in the day, but it has been one of the best-performing media stocks on a trailing 1-, 3-, 5-year basis, and it doesn't get highlighted all that often. So Switching gears a little bit. There's the traditional companies. We've talked about a few. Charter came up in this discussion and so do DIRECTV. But obviously, Hulu and YouTube TV, are 2 or what we call virtual MVPDs in this world. So can you just, I guess, educate us a little bit how negotiations and deals work with those players. How different are they either from the complexity? Or are they easy to work with and what's it like?

It's more complicated under the virtual world than it is under the traditional MVPD world. The MVPD world is very closely governed by FCC regulations because that was part of the ecosystem when the whole concept of must-carry or retransmission consent was really put in at the end of the '90s. At that time, virtual MVPDs didn't exist. So they ended up being classified really as more Internet than video providers and distributors. And so the stations are granted under FCC regulations for each individual station or a group of stations with the right to negotiate directly with the MVPDs. And that's what we do. That's what we're doing with DIRECTV, all the cable companies, et cetera. Because the virtuals are deemed more to be digital, the networks have retained the digital rights that they have. And so they negotiate with the virtual MVPDs and then they offer us the right to opt in or opt out of that. It's a binary kind of outcome. You either like it and you opt in or you don't like it, and you opt out. Obviously, there's always a third alternative, which is you -- everybody band together and you try and negotiate a better deal with the networks. But there's an intermediary between us and the virtual MVPDs, which is the network and the network can negotiate for more than just carriage of the network with those virtual MVPDs. They have other properties that are cable channels, et cetera. So they have the potential to have conflicts with regard to what's doing best for the network and its affiliates, and that's where we take unbridge with that. And there is a move afoot in Washington through our government representatives and the National Association of Broadcasters because the business of the VMVPD and the MVPD are not any different at all. It's just the delivery mechanism. And it's now a delivery mechanism that's excluded from FCC regulation because it didn't exist at the time that regulation was put in place. So maybe it's either a regulatory solution through the FCC or a legislative solution through Congress to include the VMVPDs and the retrans ecosystem that exists. We think that's a fair outcome.

And is there a momentum -- it reminds me a little bit of the music industry, moving from radio to satellite to streaming. We had to adapt copyright rules and things like that. Does this have momentum, this movement?

I would say it does, but is it at the top of any legislators list? No. But that's incumbent upon us and our peers to go out and make it so. But it's also difficult because we have the networks that are pushing back against it because they see value accruing to them in the existing ecosystem.

Got it. Okay.

So there's not uninimity in the sector with regard to how they should work.

Okay. We'll see you on the television.

Stay tuned as we say on the television.

So Lee Ann, you referenced this that I think 50% of the deals were kind of struck last year, which is great, helps derisk the portfolio for many years. But can you tell us a little bit about -- obviously, I'm not asking for the details of these agreements, but what have you seen in these recent resets with FOX and ABC towards the end of last year? How has the balance of power shifted if at all, over the last few years?

Look, I think we've been very clear with our network partners that historically, part of what we have paid a large amount of our largest expense is the payments to our network affiliate partners in the entire corporation. So part of what we have historically paid for is exclusive programming. With the exception of Fox, the other 3 networks have started to diminish the exclusivity that we have by putting the same programming, whether it be football, on ABC and ESPN or Paramount plus or Peacock putting some of the programming that historically has been exclusively available to network affiliated on their DTC platforms. That diminishes our -- the value of that programming to us. And by the way, they're creating a whole new revenue stream or at least part of their revenue stream on the backs of something that used to be exclusively for us. So we've told them historically, if that starts to happen, we'll start to pay less in affiliate fees, and you're starting to see that manifest itself.

And will investors start to see that reflected in the what line item on the income statement would that be your cost?

Station operating expenses.

Station operating expenses start to either moderate?

The growth will tail and then eventually it will start to decline. That's our expectation. And this year, we really -- in our guidance, we said that we expected, and this was before the DTV blackout, if all went according went well, we thought our retrans revenue growth would be high single to low double digits percentage growth and we said that we believed our total network affiliation payments would increase mid-single digits. So that's how you can see that retrans revenue continues to grow and the cadence or the trajectory of the growth in the network affiliate fees would start to moderate.

Got it. Now, next question, I wanted to ask you a little bit about concerns that are around traditional media, larger media and you guys about just subscriber declines. Just classic cancellation cord cutting that we see, how are you guys contending with that? How do you plan on growing revenues as a total company in the face of subscriber attrition? And how do you think about it?

Sure. I'll start and let Lee Ann follow in behind yes. I mean we're experiencing that. We're not averse to that as the largest television broadcaster, I think it's going to be hard for us to materially deviate from that. We had some stations that weren't historically carried by the virtuals, and we have worked hard to get those included. So we did have a little bit of an uptick from -- or a relative decline, lessening of decline in our subscribers relative to some others. But I think one of the benefits of the Charter Disney deal is basically we're putting the band back together. We're recreating the bundle by bringing Disney+ back into the pay television ecosystem and not strictly as a DTC product. So I think that one of the potential benefits of the Charter Disney deal is it could potentially lessen the decline or less an attrition going forward because there's less reason for those subscribers now to leave the pay television ecosystem to all DTC type of bundle because one of the biggest DTC players is now inside the bundle, that all of the charter subscribers will have access at some point to Disney+ or some version of Disney+. So we think that that's a positive development overall and could affect attrition. But generally, I would think attrition is driven somewhat by the direct to consumers, but we participate in that to a degree. And so from that perspective, I would say, generally speaking, we believe that attrition will continue but we disagree when people say that the pay television ecosystem, as we know it now in linear is going to zero.

Yes. The other point I would just add on to that is what I said at the beginning, which is we're still under compensated, right? We're delivering a higher share of the viewership than we are receiving of the fees. So as we -- so as you saw in our guidance for this year for distribution, we were able to guide towards something that was a higher growth in that revenue line that offset the attrition. So I think we anticipate we'll be able to continue to do that.

So in a way, some of those lower-quality networks that are getting pushed out -- that part of that pie accrue through you?

And that's what's causing the disparity in our contribution to the viewership versus what we get in return is because there are other content providers where that's upside down, where they're getting paid more than they're contributing. And when you start to get rid of the bottom quartile of underperforming and marginally viewed cable channels, that's where a lot of the -- dollars aren't big, but the dollars can be meaningful in terms of redistributing it to others in the ecosystem.

Got it. Now moving on to a different topic, sports. Obviously, sports played a critical role in accelerating this charter Disney deal timing as everyone was anxious to watch sports or in football seasons, but they're a big driver of viewership engagement is unbelievable. It's been -- fans are passionate. Obviously, you're a leading affiliate of all the major broadcast networks. Therefore, you participate in sports in that way. But I've seen you've done a number of deals for sports rights at the CW, your L.A. station renewed its deal with the Clippers. Can you talk a little bit about your -- how your company participates in sports and why it's important?

Well, I think let's first back up a second. All of the sports teams, all of the conferences, all of the leagues want to have a presence on broadcasting because the pay television ecosystem is not ubiquitous. It doesn't reach all of their fans. And what they want is engagement with their fans. And the way to do that, the only way really to do that is through the broadcast medium. That works for the teams, and it works for conferences and the leagues. And so you're right. We see that with the NFL, and we participate on all 4 of the big 4 networks in their NFL offerings and college offerings. As we bought the CW in September of last year, it historically had 0 sports programming on it. We took a little bit of a flyer on Live Golf early this year and had great success at the station level. I think some of the historical golf advertisers were still very much wed to the PGA Tour. And so on the network level, it didn't work out so well from an advertising perspective, but that's okay because we had a really low risk contract in terms of the fee payable to live. It was basically a rev share deal. So it wasn't really -- we weren't exposed to anything there, but what we found is the affiliates were very excited to have sports, especially because CW had never programmed weekend days before, and that's a fertile field for us because we could now program 5 to 6 hours a day on the weekends. With sports, we have done that with ACC Sports, Atlantic Coast Conference and with NASCAR, which we announced will start the Xfinity Cup in 2025, and we'll have sports on 48 out of 52 weekends in 2025. But -- and that's all new programming to the local affiliates and to our CW affiliates that they haven't had before and we'll be able to increase our affiliate fees that we charge those stations for CW programming, and they're happy to pay it because they see value in that, and it's really new programming and new time slots that can attract new advertising. And so we're seeing that on the network side. And then on the local side, you're right, we have an agreement with the Clippers and it's the same thing. Historically, they were a sports -- a regional sports network only customer, but again, the regional sports network, our spiritual sports channels in Southern California are even more fragmented. There are so many of them. And so they weren't reaching nearly all of their -- all of their fans. So we're taking 15% of the regular season games, putting on KTLA, promoting them. And not only are we broadcasting in Los Angeles, we're broadcasting in San Diego and Bakersfield as well, where we have stations to elongate their footprint and reach more of their fans, but they don't give up the entire direct-to-consumer product because Steve Ballmer, obviously, is the owner of the Clippers, and they're going to do their own white label product that they can do on their own from a DIRECTV -- I'm sorry, from a direct-to-consumer perspective that we'll cover the other 85% of their games. So it's a portfolio approach locally, and nationally, it's an approach where a lot of the leagues and the teams, NASCAR, in particular, wanted a broadcast network because their historical providers are Fox and NBC, but the Xfinity up had been relegated to FS1 and to U.S.A., not to broadcast for the most part. And they see broadcast viewership as a potential increase over the cable channels that they've historically been on.

Now the financial stress that RSNs have been under for the last few years, it's been a challenged model to put it kindly.

Yes.

That seems like it's going to create opportunities for you to get high-value sports program from RSNs who are seeking to strike creative partnerships to get eyeballs. Is that fair?

Well, we've used the term, we're playing Moneyball with sports programming. And the ACC contract is a great example of that. That was a contract that historically had -- it's a national contract, but it has historically had been purchased by Valleys. During the bankruptcy process, they rejected that contract and we got word that they were thinking about doing that. And so 10 days after they rejected the contract, we picked it up for a fraction of the cost that Bally's had been paying. Last Saturday night was the first ACC football game on the CW network. And our game was up against the big 10 Saturday night game on NBC and our Pittsburgh, Cincinnati game out drew the audience on the NBC names. And I'll tell you, they paid hundreds of millions of dollars for that contract, and we paid significantly less than that for the ACC. So it's -- we think about it just in a cost per hour basis.

Got it. I wanted to talk a little bit about demand, advertising, macro trends, while we have you up here, but world seems to be factoring in soft landing to a degree. Any update you guys can provide on the trends you're seeing in local advertising by businesses in the markets in which you serve and just out there?

I think no change in the trend, no change in our commentary. Our local business has significantly outperformed our national business. Local is a lot closer to the consumer. It's more of a demand and a price and an item and a sale type of ad. And the closer to the consumer you are, I think the better off you are right now because the consumers continues to be healthy. I think what you're seeing in national advertising is an uncertainty in the overall economy and the closer you get to the cash register, I think the better businesses feel about the health of the economy.

Okay. That's great. And then look, we're heading into 2024 presidential election year. Can you remind us how big this is for you guys and any expectations, whether yours or experts we should pay attention to on the topic?

Well, I think nobody expects this election to be any less contentious than the last several elections. And obviously, we have the added benefit of presidential contest this time where we didn't 2 years ago. Each of the last 2 cycles, we've been in excess of $500 million of revenue, which is substantial. And also, it's interesting because the last presidential election being in excess of $500 million is noteworthy. But the last non-presidential also being -- for us, in excess of $500 million is noteworthy because historically, about 25% of advertising -- of advertising in a presidential election is around the presidential election or in the presidential cycle is around the presidential election. So you can see why some of the estimates for 2024 can get a little out of hand in terms of what the expectations are. But we clearly expect it to grow. I think there are a lot of different ad agencies that give their estimates on total political advertising, but all of them have it increasing double digits over 2022, and we think it will probably do that or potentially more.

Okay. Great. Another topic -- I want to -- I want to see if there's any questions in the crowd. We have a few more minutes. Anyone? Okay. We'll keep talking. You recently put out an RFP for a measurement company. And your Chairman and CEO, Perry made some comments on your last earnings call talking about being undermeasured. This has been controversial topic in media and in the transition of digital media for the last several years. So can you talk a little bit about what you're looking for here and how you think you're not getting measured profit some of...

I would say our problem with the measurement or our general unhappiness with the measurement. It comes primarily in out-of-home advertise or out-of-home viewing and in local viewing, specifically outside the top 50 or 55 metered markets, which is a large portion of our television station portfolio. And so we're looking for either new entrants or the incumbents willing to put more assets and emphasis on those 2 areas in particular because we think whether it's viewership in bars or clubs of sports primarily or viewership in small markets where people meters aren't used. And essentially, what they do is they mathematically try and extrapolate what viewership is. We're looking for more consensus and also energy to be put behind those 2 efforts where we think we're underrepresented.

Okay. And I guess getting down on wire here, but I wanted to ask you, obviously, the CW was an interesting deal that you guys struck and acquired about a year ago, I think. So we see the new slate is launched. You recently announced some distribution deals at Sinclair, Gray and it has sports rights as well. Are you more or less optimistic about this business than from when you acquired it? And just any color on CW how it's going?

Yes. I would say we're equally as optimistic about it. The sports, I wish we could say when we did our strategic plan, and the lead up to the purchase of CW. We knew that the RSNs were going to implode. We knew that a lot of the teams were going to come back on the market. We knew that there would be new opportunities like Live Golf, because all of those opportunities fit well for us when you consider that the incumbent sports providers, the 4 large broadcast networks and ESPN basically have overbought, and not only from a price perspective, but from a volume perspective. They have more sports than they can show. And so ESPN has put a lot of that now on ESPN Plus but that's expensive to a relatively small audience. And so we're at the intersection of the right time to be coming to market, interested in sports because again, we had 12 hours a weekend of basically fertile field ready to plow with good sports programming. So we always thought we would get into sports programming, but to have ACC football on less than a year end, to have Golf Live -- golf on less than a year-end and to have a major portion of NASCAR's product on our network two years in, is a win for us.

I have one last question and it's a little more, I don't know, thematic or topical, which is as we're sitting here and talking about Disney+ being folded back or made available in a bundle, it's kind of a jarring thing to say or a change from the last year. Am I reading that right? Is it that big a deal? Did it just -- did we just like in the last -- was the bundle just saved?

Well, I think if you look back on all this started, which was really at the tail end of the pandemic, right? It's when everybody was at home, everybody was consuming more television everybody wanted more choices, the hue and the cry for more entertainment programming was at its Zenith. And back then, in the 0% interest rate economy, everybody was paying premiums for growth. Well, we're in a different economy now and growth is important, but growth has to come with profit. And as Lee Ann pointed out, all of the large media companies that have DTC products are losing money on their DTC product, and there's no clear pathway to profitability. And so I think investors have had a meaningful effect on companies with regard to growth at any cost, which was basically what they were -- what they initiated and how they set out down this path from a DTC perspective, but investors have pivoted away from that and the companies are having to do that, too. So yes, I would say relative to 2 years ago, it's pretty shocking. Relative to the last year. I don't think it's shocking at all.

Perfect. All right. Well, thank you, Tom. Thank you, Lee Ann, again, really appreciate you guys attending our conference.

Thanks, everybody. Appreciate your interest.

Thank you.

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