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

Good morning, everyone. My name is Benjamin Soff. I cover TV broadcasting here at Deutsche Bank, and I'm very pleased to be joined this morning by Nexstar's President and COO, Mike Biard; and CFO, Lee Ann Gliha. Thanks for joining us, guys.

Thank you.

Thank you.

I thought it might be good to start us off with some of the highlights for Nexstar in 2023 and maybe what your key priorities are for 2024?

Sure. Well, first of all, thanks for having us. So I joined the company in August. So if I sound like a list of highlights for '23 has anything to do with my personal performance, let's not be confused about that. I was privileged to join a great team who had a terrific 2023, led, of course, by Lee Ann and her team. So 2023, I think, continues the story of Nexstar. Terrific financial performance. If you look at the 2022 and 2023 cycle together, which is how we look at it based on the variability of political revenues coming in, we delivered, on average, $1.8 billion of adjusted EBITDA, and on average $1.2 billion of attributable free cash flow. It's just terrific performance. We expect to continue that in 2024 as well. Among the highlights contributing to that performance was our distribution team doing another bang-up job, getting all of their deals done, including 2 of the top 4 pay TV distributors, one of which was done in -- actually both, I think, were done in Q4, maybe one of them done right at the end of Q3. We lapped our first anniversary as owners of the CW and really continuing the fundamental transformation of that business. And if you look at the performance in that first year and a lot of what we're doing there is really still to come in terms of fundamentally changing the programming, we've acquired a significant number of marquee sports, which is a first for that network. And I think I have really started to deliver on the promise of making the CW a legitimate fifth major broadcast network. And then inside NewsNation. We continue to deliver the fastest growing cable news network in primetime and sort of hit a highlight at the end of the year when we secured rights to the last presidential -- Republican presidential debate before the Iowa caucuses, which is just a tremendous achievement for a network that's 3 years old. We haven't even gotten to 24/7 news and we still have some residual entertainment programming from what the network used to be that will transition out of this year. By midyear, we'll be 24/7. So all in all, it's a terrific year both for the traditional business as well as the new businesses that are really just starting to hit their stride.

Yes. That's great. And we're going to definitely touch on a bunch of those in our conversation. But what are the main drivers in your business and a key debate for investors is how much runway you have to continue increasing retransmission pricing. As you put it, you guys recently wrapped up a major renewal cycle renewing about 90% of your base in the last 2 years. And you just guided to high single-digit retrans revenue growth for 2024, seeming to indicate that pricing is pretty healthy. So can you talk about the main factors that should allow you to capture higher pricing, and how much runway is there for price increases that can offset pay TV subscriber churn?

Sure. One clarification on that. I think we guided to high single digits on total distribution revenue. So not just retrans, that includes NewsNation as well. So like I think if you look at the business the way that we do, essentially, we start with the fundamental premise that our share of wallet, right, the earning power that comes out of pay TV should match the value that we deliver and the easiest, most objective measure of that is ratings. And when you look at the Big 4 networks and we're the #1 or #2 non-O&O group for 3 of the Big 4 networks, and #3 for the number -- for the other fourth network. We deliver a lot of Big 4 programming, right, more than anybody else across the country. And the Big 4 networks on average, deliver ratings that are 4x what ESPN delivers. And if you look at the rate that ESPN gets versus the rate that we get for retransmission consent, there's still some healthy headroom for us there. So that's one marker. I think if you look at the overall earnings of broadcast relative to the ratings that it delivers, we generally -- and we published a report on this in October that lay some of these details out. In general, broadcast pulls out about 25% of the fees out of pay TV, but we deliver about 45% of the total ratings. So that's another metric by that measure and you know there's 75% more earning power to get to where the fees would match the ratings. So trees don't grow to the sky, but they can still get pretty high, and we think that there's still some room for growth there.

Good analogy. Maybe can you guys talk a little bit about the organic growth rate implied in that high single-digit guidance. There was some noise last year with the DTV blackout and you just turned back on certain partner stations this quarter?

Yes. So there's a couple of different pieces and noise in there. Of course, you have the fact that we were dark with DirecTV for a little longer than we hoped and certainly longer than we wanted, but we ultimately got that deal done in a way that made perfect sense for us, right? It was essentially an investment on the final deal to have to go dark, and there was a good ROI on that investment. But nevertheless, if you sort of take that noise out and you account for pay TV attrition, we've guided to mid-single digits on the organic growth.

What are your expectations for pay TV churn this year, and do you have a view on whether the rate of subscriber declines will moderate at some point in the future?

And I guess I'll start with the obvious that we don't have a crystal ball in this year, but I don't think we think this year will be materially different than last year. Having said that, I think there are some tailwinds that probably in the longer term, we're hopeful will help moderate that attrition rate. Start with the fact that streaming services, which have contributed to some of the pay TV erosion by pulling subscribers out, those are getting increasingly more expensive, both what I would call sort of pay TV-derived streaming services as well as like Netflix, which never really derived from pay TV. They're getting more expensive and they're also adding advertising. And so both the price and the user experience, I think, are changing in a way that will narrow the gap versus pay TV and a couple of key metrics. Longer term, we look at some of the trends around content. Certainly, the programming inside pay TV is not getting less popular, right? The sort of cornerstone programming continues to be as popular as ever, and notwithstanding the smaller base inside pay TV, linear TV, you only have to look as recently as the Super Bowl to see that it can still aggregate audience that scale that we've never seen before, literally, for sports. College football performed a series of high water marks, including on CW. Just event after event, you capture these moments, women's college basketball, right, on Fox this year delivering new records. So the program continues to be popular. I think the notion that, that content was going to all migrate to streaming and that was going to be the death of pay TV was highly exaggerated. And in fact, we see the opposite happening, right, that as part of the Charter-Disney deal, you saw that now inside Charter's Spectrum TV service, those subscribers get Disney+. And I think last week, they get ESPN+ if they subscribe to the right package. And if and when ESPN ever launches their flagship D2C product, that will be included for their subscribers for free. So the sort of incentives to put exclusive content inside those services or migrate content, even worse from a linear service into those, that's going away. And we think all of that will contribute to a slowing, hopefully an abating level of erosion over time.

On the expense side, you and some of your peers have mentioned that the growth rate of reverse compensation is moderating. What are the primary factors driving this? And what does that mean for net margins over time?

Well, I guess I'll start with the last question on the net margins, we guided to our net retrans for 2024 being in the low teens. So that gives you some sense there. I can't speak for other companies. I can speak for ours and why those increases have slowed. I think for us, part of it is our scale, right? We bring a different scale to the conversations with our network partners and then that certainly helps in the cost curve in our favor. But you also have to look at some of those networks have essentially reduced the value that they deliver to us. I've said that in the area of network television and particularly in the distribution chain, exclusivity is the coin of the realm. And to the extent they've diluted that exclusivity by taking that content and putting it on a direct-to-consumer product. They've diluted the value to us. And we've said that pretty clearly. If you're going to reduce exclusivity, you're going to reduce value, and that's going to be reflected in the agreements that we reach with each of them when the time comes up.

And just as a follow-up to that, there's been some discussion recently about the fact that certain reverse compensation deals carry a fixed cost structure. Just curious if you guys could talk about your thoughts about that?

Yes. I think it's unfortunate that, that one aspect of some deals, not all deals, has gotten this sort of unwarranted disproportional focus. We look at our deals with our networks and we've said this publicly, they're multifaceted deals. There's a lot of different moving pieces inside each of those deals. They're all unique. None of them look like the other. And we're not as focused on one particular feature or construct of a deal. We're focused on the net cost, right? And a fixed cost, I mean, listen, that's great if the fixed cost is at the right price. And that's really what we're focused on how all the moving pieces work together really towards our singular goal of controlling the aggregate net cost to us. And you can see in the guidance that we've provided, we feel pretty good about where that's been and where it will go.

Makes sense. One of the bigger developments this quarter was the announcement that three of the major media companies would be forming a JV and putting together a sports-centric streaming bundle. Our view has been that this product is unlikely to cause major disruption in the pay TV space based on what we think will go in the bundle and what it will cost. However, clearly, there are some concerns out there and the stocks have been under pressure since the announcement. I'm curious to get your thoughts on this product and what type of impact do you think it will have on the pay TV ecosystem?

Well, we 100% agree with you that the reaction was overblown. And to the extent that there was a read-through that this product was negative for our business, we think it was categorically inaccurate. I'll start with that. We think that the market got it wrong, essentially on that. So listen, there's been lots of discussion about the challenges that the JV owners will have to run the gauntlet of things they'll have to get through to go from announcement to launch. And assuming they get through that, and we have no reason to root against them, we think the product ultimately could be a good thing for us. So I came from Fox. I know how they think about protecting their pay TV business. I know they will be very careful about doing what Lockman said this product is intended to do, and that is to target very carefully target a relatively narrow subset of the populists that are cord nevers to our sports fans, right? Cord nevers, and to some extent, cord cutters. And he said, I think recently, they expected on the order of 5 million subscribers over 5 years or so. That's not a material impact on our business. And to the extent that they really are cord nevers, and those are incremental to the pay TV system. We're all for it, right? It's an incremental revenue stream for us. We have confirmation from both them and Disney that this will operate like a virtual MVPD, which is to say that our stations, our FOX affiliates and our ABC affiliates will have an opportunity to opt in, both be carried and get paid, our full 24/7 stream of our stations. And if that happens and they target cord nevers and they get the thing off the ground and all of those things happen, then we welcome it. It will be a great opportunity to introduce our stations to an audience that may not be familiar with them right now.

Just sticking with sports. We're starting to see some changes in the live sports ecosystem where teams and leagues are increasingly looking to broadcast as a preferred TV platform. Now that the RSN model is facing challenges, you've done one such deal with the LA Clippers so far. What makes broadcast such an attractive platform for sports? And do you expect to look at additional deals like that in the future?

Let me start with the last. I think, yes, we'll be opportunistic and look at those deals as they come up. You mentioned the RSNs and everything touching the RSNs right now is completely fluid, and if you know what the future of that business looks like, I figure out a way to bet on that because It's just completely murky. So -- but back to the core question, which is the broadcast platform. The reach of broadcast and what it offers to particularly the sports teams and leagues, conferences and so forth is unparalleled, right? There is no other platform like broadcast if your business model depends on sponsorship or advertising or broad access to fans, right, either because you're growing or because you have another element, like I said, an advertising or sponsorship. You can look at our Clippers deal you mentioned and see that in action. So we have 12 to 15 games. I think this year, we'll have 15 games of the Clippers on KTLA in Los Angeles, terrific station. But let's face it, 15 games is a distinct minority of the overall Clipper schedule, the bulk of which airs on the local regional sports network. And yet, when those games air, we do a rating on KTLA, that's about 100% bigger than what they do on the RSN, notwithstanding the fact that, that is not the regular home. It's not the home of the Clippers, it's a vacation spot. And well, why does it do that? Well, because broadcast continues to be the destination of choice for sports fans, right? That's where they go more often for big events. It makes perfect sense for the Clippers to do it because they're reaching an audience significantly greater, both in terms of potential audience and actual audience than what they're getting on the RSNs. So certainly, Steve Ballmer has the resources and the foresight to see the wisdom in that. Whether every other team approaches it the same way, I think, remains to be seen. Not everyone will have that financial wherewithal to make the decision to forgo a big check for reach and that's some of the tension that's out there. The broadcast business is not going to recreate the revenue streams of the traditional RSN business, how the new RSN business is not going to recreate the revenue streams of the traditional RSN business. That's changing as you saw in the headlines as recently as this week with RSNs being re-tiered on major operators around the country. So -- but the point for us is broadcast continues to be beachfront property. Whether it's on the local stations or whether it's on the CW, we're offering a reach that is really unparalleled. And you can just look at all these different examples, I mentioned the Clippers another one that comes to mind is Thursday Night Football, on Amazon Prime. It's discussed popularly as though Amazon Prime has those games exclusively. They don't have them exclusively in the home market of each team that's playing. So every Thursday night, that game is broadcast on over-the-air station in 2 markets, one from each team. And when you look at the ratings in the local markets, people tend to vote significantly greater with their eyes to go to broadcast as opposed to Amazon Prime to watch that game. I think we looked at it most recently, and on average, about 60% of viewers will choose broadcast over Amazon Prime. Notwithstanding the fact that if you're a football fan, all you've seen in terms of advertising on Sunday morning and Sunday night and Monday night is that Amazon Prime is the home of that Thursday night game. And yet, more than half of people will watch it on broadcast. There's lots of reasons for that. I could harbor a few educated guesses. I mentioned the broadcast is the first choice for sports fans and the other is the user experience. TV timeout comes players injured on the field whatever it is, you want to change the channel and see what's going on in another game or check something out. To turn Amazon Prime, it's like 6 clicks out, then you got to get back in and maybe change the input on your TV. You like want to pull your hair out by the time you're done, right? And god help you if you're trying to do that at the same time, there's another game on and you want to go back and forth. It's just like the user experience is just -- it's less than ideal. And I could elaborate on that, but I'll come back to what I was talking about in terms of just the comparison between broadcast and other platforms. Monday Night Football is another good example. This year, you saw ABC simulcast Monday Night Football from ESPN almost every week. And you see very similar ratings performances where people go to ABC versus ESPN at about the same rate that we see them go to broadcast over Amazon Prime, which is a remarkable feat given the fact that ESPN has been the exclusive home of Monday Night Football, for, what, 15 years, something like that. So it just continues to be a terrific platform, particularly for sports.

Shifting gears a bit. One of the big tailwinds in your business is that every 2 years, broadcast gets a big bump from political advertising. Can you speak briefly about what makes broadcast such a good medium for political advertising. As a follow-up, what are your expectations for the 2024 cycle? And what are you seeing so far in the primaries?

Do you want to take that?

Yes, I'll chime in on this one. Yes, you probably have heard the phrase all politics are local. Well, there's really no better one at delivering local audiences at scale than the largest local broadcaster, which is Nexstar. So we really provide a really great forum for anyone that's looking to seek both to access that audience. We actually went back and we did some research to look at what is the demographics of the voters. And in the last election, 60% of the people that voted were aged 50 and above, which is a perfect overlap with our demographic. You'll probably see some money that goes to the digital and other forms of media for political. But what historically has happened is that digital is really actually very good for fundraising and television is very good for winning. And so that's where you kind of see that discrepancy in terms of where the dollars go. But having said all that, we feel very good about what's going to happen in this election. I think there's a number of different services out there that kind of track this very closely. And in general, the thought process is that there's going to be something north of $5 billion of gross dollars that are going to be spent on political advertising. And just to clarify, we book net after agency commissions, and so when you see those dollars externally, it's a gross number. And the beauty of our portfolio is that I think you're aware that we cover like 70% of the country. And so what tends to happen is if there is a hot race somewhere and pack money goes here and that becomes less hot, it can get shifted over to another one of our markets within our portfolio. And we went back and we looked at sort of the last maybe 4, 5, 6 cycles of political spending, and we find that we generally attract a low-teens percentage market share of the television advertising dollars that gets spent. That's what's nice about our portfolio. It's pretty consistent like that. So that's our expectation for this year. We feel like, it should be a strong year. We look at -- the indicators we look at are fundraising. The SEC has a good website that shows how much money is being raised. I think there's a lot of questions about the primaries and that maybe wasn't as great this year. And that's one thing actually in 2020, there was a good amount of spending in the first quarter, that was related to Bloomberg and Steyr that had spending. We didn't have that this quarter. But really, when you think about it, not when you think about it, when you just look at the numbers, it comes down to really the time frame between Labor Day and the election that really where the bulk of the dollars get spent. And so that's where we're focused on. And we're expecting that it will be a strong year, higher than what we generated in 2020 and 2022.

Shifting to national. You mentioned on your last earnings call that the national advertising market has been challenging and that those trends had worsened so far in 1Q. Can you talk about what's going on in that market a bit more?

Yes. I mean, look, I think national advertising, as you know, is much more brand-building advertising versus our local advertising, which is much more call to action. So it's the guy that's trying to get you to call them if you get a DUI. You need to know that guy's show numbers so that when you get in trouble, you can call them. That's the kind of thing that's on the local side. On the national side, it's much more about kind of you're building your brand. And so a couple of things have affected that market this year, I think -- or the last year. Number one has been the rider strike. There's been less kind of entertainment and good inventory in which to advertise and to get your brand out there that tracks less viewership you've seen that just kind of across the board. And then I think the second thing has been just kind of this really elongated overhang of recession. Everyone has been saying, we're going to go into a recession, we're in a recession. We're -- from a national advertising perspective, we've been in a recession, and that's mostly because if you're a big brand and you're looking to pull back on any expenses because you think it's going to be a recession, this is a variable expense that you can pull back on. So those are the things that have been happening. I would say as of late, we've been seeing a few green shoots in terms of more excitement around kind of the things that broadcast does best, which is live sports and live events, but I think we're still kind of in the zip code of what we talked about on our last earnings call in terms of the trends.

You recently moved your national sales platform in-house. Can you talk about this effort and how you see your national advertising position today?

Yes. We're very excited about that. We've got scale now from a national perspective with our national networks in the CW and NewsNation, and we actually have a national network that's a multicast network called Antenna TV. We've got a digital platform called The Hill which are all kind of national-based businesses. And then from a local perspective, we almost have a national platform in that we cover 70% of the country. And so we just -- we're sort of getting to the point where does it make sense to continue to have a third-party rep firm that's repping not only us, but everybody else that's in our market or do we bring that in-house? I mean, there's really going to be nobody that's going to be better to sell and to talk to those advertisers about our assets than us. Like we can have that conversation with whatever brand about a national platform, but then, hey, do you want the top 10 DMAs? We can give you 8 of them. We can give you activation in these markets. Or do you want to be on The Hill because we've got this great feature. There's -- it's an ability for us to kind of just be in the room with those national advertisers now that we've got the national platform, but then also kind of sell all of our assets. So over time, we think that should be accretive to us. I know the national market has been more volatile, but at the end of the day, it's still twice the size of the local advertising market, and we're a small fraction of the overall national pie. So we're excited about that opportunity.

You alluded to it just now, but it does seem like the local advertising market is holding up pretty well. Can you talk a bit more about what you're seeing in local ads and if there's anything to call out across key categories?

Yes. I mean, look, the local advertising market has historically been more resilient recently and I think that goes back to what I was saying about as much more call to action. You're closer to the cash register. You come in, we're having a sale, you want to buy this furniture right now, right? That type of an advertisement. And so the local businesses really see the value in the ad because if their ad goes away, they see their revenue go away. And so that's been much more resilient. I think from a category perspective, we've had a couple of things that we've called out on our calls like auto, was doing better last year. It started to recover. We had sports betting. That's kind of trailed off. But I would say in total, it's kind of more of a broad-based -- there's not really sort of any sort of one category other than those few that are creating the noise for us.

Shifting to the CW. You purchased the network in 2022 for no upfront consideration, but the business was losing money. You've made some good progress to date, including rolling out a new programming slate, winning some high-profile sports rights, improving the cost structure of the business last year. Can you talk about the importance of the CW to Nexstar and how you think about the path to getting that business to profitability?

Sure, I'll take that. Yes, I mentioned we just passed our -- well, not just but a few months ago, passed our first anniversary of owning the business. The transformation has been really fundamental at all levels, both in terms of the programming slate, overhead plans for the future. You mentioned sports. We're very opportunistic with the first sports being our LIV Golf deal at a time that LIV Golf was getting a disproportional amount of media attention. That's not abated. That's been a fun first place to be. And it kind of hung a shingle out on the door that we were open for business on the sports side, and we've managed to do a few deals since then. We just finished our first season of college football and basketball with the ACC. Terrific results there. And in the fall, we'll have WWE NXT series, which will be every week, 2 hours a night -- 2 hours a week, one night a week for a year round. And then in 2025 will be the exclusive home of the NASCAR Xfinity Series for the full season. So super excited about what's on the horizon. Still some work to do on the overall business as we've talked about. We improved the performance of the business by $90 million of EBITDA performance this year. And we've said we expect to get that to breakeven within the next couple of years. So the trajectory is where we need it to be, but still some work to do. And we're seeing good resonance there, including some organic synergies with NewsNation. I mentioned the presidential debate that we had in NewsNation, we simulcast that on the CW and delivered a huge audience that night. So we're looking for those sorts of synergies inside the company going forward that we think will be really exciting.

And just sticking on NewsNation. You said it's the fastest-growing cable news network out there. Can you talk a bit more about some of the recent wins, you mentioned the debate and your vision really for NewsNation going forward?

Yes. I think, the vision for NewsNation is the right vision at the right time, it really feels like to me. We are increasingly serving a growing underserved audience when you look at what I call the light hot polar extremes of the partisan networks that are out there today. You have a massive and growing sort of middle, centrist folks who are really hungry for fact-based partisan-free news. And that's really at the core of what NewsNation is and will continue to be. Never more visible than last night, where we had Chris Cuomo sitting down with Tucker Carlson for an extended interview. So we continue to get these significant wins, whether it's the presidential debate or Tucker and Chris. And if you know their history, the fact that they were not inside a ring go and throwing blows at each other is somewhat amazing. So -- and that speaks really to the mission. It feels like it's capturing the zeitgeist right now of a lot of folks who are really kind of tired of the screaming heads out there, and you can see it in the performance. It continues to grow in prime time. As I mentioned, in 2023, we went from -- went to 24/5, right, full-time news, 5 days a week. We will be at 24/7 by midyear this year and continuing to just find momentum. It's been fun for me coming to the network from the outside, and it's interesting just in the last 6 months that I've been there, the sort of the name recognition, I noticed it change just in that time frame. No surprise. A network that's 3 years old. Do you think it will have lot of name recognition a year ago? And now we do, and I think that just speaks to where it's going.

ATSC 3.0 represents one of the more exciting levers for longer-term growth for broadcast. How do you think about this opportunity? And can you provide some examples of the type of use cases this new technology could bring about?

Sure. Why don't I start, and then I'll hand it off to Lee Ann. I think ATSC 3.0 is -- right now, we have converted about 3/4 of our households that we serve in our stations to ATSC 3.0. That is the ability to deliver essentially a high-speed data stream to places that you can't get via satellite and in many cases, even cellular. So if you just think about all the different things in our life that are increasingly connected in need of a data stream, and that's the sorts of business opportunities that are out there, and whether that's connecting to cars who are constantly now in need of software updates. A TV signal can go into a garage, satellite signal not so much. And so the ability to improve that delivery rate over the status quo is significant. Other opportunities to combine with satellite to more -- to deliver more precise geolocation, whether that's to a delivery service, a drone, an automated tractor milling a field, you need to be precise with that. And GPS is close, but not close enough. And so there's all sorts of opportunities out there. And we have relationships with a couple of other broadcasters that allow us an unduplicated reach of about 90% of the country. And so we're at the early stages of trying to figure out some proof-of-concept testing that we expect will be out there this year.

Yes, I would just add, I think there's a number of industry sources that have done some work around this and the expectation is this could be longer term, potentially as big as retrans revenue longer term.

This past quarter, you gave 2024 guidance, which featured an adjusted EBITDA range, roughly $2.1 billion for the year, slightly different than how you would previously approach guidance, which is on a 2-year free cash flow basis. Walk us through your guidance and why this new format made sense right now?

Yes, yes, sure. I mean I think when I came on board, I kind of did a resurvey of like, what is everybody doing in terms of guidance? What are our peers doing? What are some of those companies that are a little bit larger than us doing? And what I determined was that actually a lot of people don't provide any guidance at all or some people will just provide like the quarter right in front of them. And we were providing 2 years of guidance, which just seemed kind of out of step in terms of what the overall market was doing. We also noted that we have a lot of shareholders and investors that are looking at our business based on an EBITDA metric, and so we thought that this was a metric that kind of more aligned. I know when you're looking at your Bloomberg screen, you're not seeing a 2-year average attributable free cash flow stats that you can compare it to. You're seeing an EBITDA number. So we thought that, that would be useful. And then we have -- the 2-year free cash flow guidance was really helpful. I think, 10 years ago when we established it in 2014 when the company was trying to educate the market on the 2-year political cycle, we were much more levered, we were doing a bunch of M&A., we were trying to sort of talk to the market about how much free cash flow we're going to generate and how quickly we could delever and pro formas were more difficult to kind of figure out. And so I think now we're just at a point where a lot of those things, the market understands and is kind of more accustomed to. And so we decided that it made more sense to kind of focus on kind of one metric, simplify the story. We all get paid based on what we hit that EBITDA number from a bonus perspective. So it seems like a good one to share with you and also provide some level -- the difference between EBITDA and for cash flow is not too hard to get to. And so I'll help you out with respect to that as well.

Makes sense. Can you remind us how you think about capital allocation more broadly and how you evaluate the different ways you plan to use your cash flow in a big political year?

Yes. I mean look, we always are looking to use our cash flow to maximize value to shareholders. And so we have a few things that we have to just -- we take off the top, right? We have mandatory amortization from a debt perspective. And then we have our dividend payment that we like to kind of increase every year. We saw we increased it by 25% again this year. So those things kind of come off the top. After that, then I sort of look at, well, what's left and what do we have on the table. And historically, we've done a lot of M&A. That's been incredibly accretive. There hasn't been as many things on the table. In fact, we haven't done a deal really since 2019. And so that then comes back to, how can I maximize value for my shareholders. And when I look at my free cash flow yield of high teens and sometimes low 20s, that's very accretive for me to start to continue to buy back that stock. I mean last year, we bought back almost 9% of our stock and the prior year was 10%. And since 2019, we spent over 25% of our stock. And so that creates accretion, we think, for our shareholders. And when you add that together actually with the dividend, we return, I think, on average over a 2-year period, something close to 80% of our free cash flow to shareholders, which actually if I just -- you do that math on a market cap, it's actually up 15% cash return out of our free cash flow yield, which I think is pretty attractive from a returns perspective for shareholders. We are a little bit -- we are mindful of the fact that -- I'm glad you pointed this out that. We generate more cash in a political year. And so historically, that's meant we bought back more stock in a political year, which is sort of a little odd given that where our stock tends to perform better in a political year. And so this year, I'm going to try to probably pay down a little bit more debt with our excess cash yield this year to kind of streamline that a little bit. So that's really the plan. I mean, look, our goal is to always be mindful of our free cash flow metric and just creating the most return we can for our shareholders.

Great. Makes a lot of sense. Well, I think we're about out of time. It feels like a good place to end it. So thank you guys both for joining us. Thank you to all of you on the line.

Thank you.

Thank you so much. I appreciate it.