Sinclair, Inc. (SBGI) Earnings Call Transcript & Summary

Go ahead and get started. Very fortunate to have Chris Ripley, President and CEO of Sinclair. In full disclosure, I just met Chris for the first time outside this door. So it's very nice to meet you.

Nice to meet you, too, [ Jason ].

Yes. So maybe, I guess, most investors know what your story is about. But maybe just to frame it for anyone that's living under a rock, maybe if you can just start with a brief overview of maybe the old Sinclair, the current Sinclair and what are the sort of main strategic priorities for your firm?

Sure. So look, a lot has actually changed recently. We have our broadcast business, which is one of the largest in the country, highly diversified amongst all the major networks and a significant producer of local news. We have now the regional sports network side, which is the largest operator in that space. And so really, industry-leading positions in both local sports and local news. And those 2 areas are really our area of concentration. We have other operations as well, but we like those areas specifically, because the trends are the best in the industry. When you take a look at the share of live viewing of sports and news versus all other content genres, over the last 5 years, sports and news have gained 26%, and all other genres have lost 6%. So it was really over the last 5 years an explicit focus of ours to get heavier in sports. We already had a big news footprint. And we've been focused on upgrading that, making it more significant. But sports and news is where we wanted to be in this changing ecosystem. And our content strategy overall is fairly simple. It's to have content that matters. And on news, we do that through investigative, for instance, and we started that initiative up 3 years ago in Baltimore. It's something called Project Baltimore that just focuses on the school system, one of the most expensive school systems in the nation but yet worst performing. And it's a topic that is near and dear to that community. And that particular unit has won multiple awards, including national journalistic awards. And we've now rolled out investigative to 25 of our markets to focus on something that's germane to that specific community. And consequently, we have the most awarded newsrooms in the industry. And we really have -- that's a conscious effort to get away from the cat-and-the-tree story and a Ron Burgundy-style newscast that pervade the industry. And it goes back to having content that matters. And then that really applies to the RSNs in a big way. Because when you take a look at the gains on the RSNs, nothing but tentpoles. When you aggregate up the audience of the gains on the RSNs, they exceed that of the top 10 entertainment programs on television today in their respective markets, and they have the most passionate fan bases that you can find on television, those that will actually move subscription services if they don't get the content that they want. So that's really what we're doing on the content side. And then in terms of how we service our viewers, we're all about being multi-platform, being everywhere that they are. And you've seen that in what we've done with STIRR, which is our ad-supported streaming platform. We also have NewsON, which provides on-demand and in-pattern news across 95% of the country. So that's our news and other affiliates. And then we've got Fox Sports Go, which is going to get revamped here now that we've taken over, and it's going to be much more central to the strategy and it's going to have much more than just streaming. It's going to have additional content around our teams. It's going to have more data, more in activity. And it's going to be at the core of our strategy rather than an afterthought that it is today. And then from an advertiser perspective, we really are a preferred partner in many ways. So we deliver scale to live and engaged audiences on a national, regional, local network and digital basis.

That's super-interesting. So I -- can I tell you a funny story? So this is probably 4 years ago or whatever on our internal team, we were sort of penciling out where the TV industry was going to go. And we sort of came to this idea that it was all about live, right, that anything scripted, nonscripted, it was going to ultimately migrate to the cloud. And I would spend almost all of my time trying to explain this to the buy-side, because I didn't feel like the buy-side sort of -- the light bulb went off. I wasn't even sure we were right. And I was in a meeting with Comcast's CFO, and I sort of trotted out this idea that linear is going to be synonymous with live, which is sports and news. And he said, "Well, isn't that sort of obvious, right?" And so it made me chuckle, because I don't think it's obviously yet to the buy-side. Like I still get questions about this all the time from institutional investors. They get the idea that sports franchises, the NFL, NBA, Formula One, WWE, are okay. But like, I'm not sure it's sort of that idea sort of trickled down to sort of what you want to do with someone that is producing content and focused on just anything that's live. And so I give you kudos for sort of architecting your strategy to sort of lean into that, because I think it's a pretty cogent way...

Yes, I think you're spot on -- you were spot on. Like it may not have been obvious then, but it's certainly obvious now what's going on. And general entertainment on a linear basis is almost interchangeable. You need to have it. But it's tonnage, just you can swap out one for another.

That's right. So maybe I can just talk a little bit about your stock. So it was up about 30% over the last year, but also down about 50% from the highs that happened back in May of 2019. And so can you just spend a little bit of time and talk about sort of what are those things that's giving the buy-side so much agita that's causing the volatility in your stock price over the last 18 months or so? Or...

Yes. So look, I think it's -- we're in a very interesting point in time. And when you dissect our position and our stock, the RSNs are trading at a negative equity value, which doesn't make any sense, because how can you go below 0? But seemingly, that is what -- well, that's what the numbers imply. And I think it's a huge miss by the market, at least as there's option value, if not significant value in the RSNs. And what they're missing is we have an incredibly unique position in the ecosystem as the dominant player in local sports, as we have 55% of all of the U.S. teams as our partners. And that gives us a very unique position vis-à-vis the distributors but also vis-à-vis the teams. And we're really an essential piece of the puzzle that cannot be replicated and cannot be replaced. And so that affords us a bunch of unique opportunities, which I don't -- I think are completely missed by the market. Because all they're looking at is just what's the current pro forma ex DISH, for instance. And then the other thing they're missing in a big way is the huge impact that online sports betting are -- is going to have on viewer engagement, which I can show you -- I could cite study after study that show how engagement goes through the roof when you add interactivity and you add skin in the game. And then the other component that they're missing on that is it's going to open up new avenues of monetization beyond advertising and subscription for sports betting. So there'll be a third prong on monetization. You don't have to pay a subscription. You don't have to watch ads if you're betting on a sport. That's the third way to monetize it. And by the way, it's not going to be probably either-or, it's going to be all 3. And so it's an incredibly exciting opportunity. It's what I spend most of my time thinking about. And I really think 5 years from now, we'll look back and people will wonder how Sinclair bought the largest collection of sports rights in the country for a song. That will end up being the anchor for what I think is going to be a massive sports betting economy. And then last, what seems to be really overlooked is the significant overperformance within the legacy TV broadcast business that this last year, just quarter-after-quarter, kept blowing away guidance. And that's being totally lost in the next year.

Interesting. And you guys were blowing away guidance or Street expectations because of what, it wasn't political, so just strength in the underlying economy?

No, just pure strength in the core, core advertising. Our digital strategies are starting to really take hold and not -- I mean, they've always been growing at a very high rate, but now they're bigger dollars. And so the high rates have continued, and the dollars have gotten bigger, and they're starting to move the needle even that much better. And so just straight up great execution and then the continued growth in that retrans, which is a huge driver of our TV broadcast business.

Okay. So missing sort of underlying core growth on local, overestimating downside related to RSN carriage and underestimating sort of upside outside of sports, that's sort of the...

Well, yes. From what it looks like to me right now when you dissect the numbers is that there's negative equity value on the RSNs, which shouldn't be possible, but somehow it's being factored in. That's the...

So let me just start on the RSN side. So where have you successfully renegotiated sort of RSN carriage sort of...

So we've already been very busy. We've just -- we're just 4, 5 months into the acquisition and we've already renewed 75% of subscribers for -- on to long-term new agreements. And that includes AT&T DIRECT (sic) [ DIRECTV ], Charter, COX, Mediacom. And the only real big player left is Comcast. And we just renewed the Detroit RSN with them, which was sort of a one-off RSN that expired at the end of the year. And then the rest are this summer. So really, discussions haven't started yet as it relates to those. And we also have our TV stations up the -- about the same time. So we expect Comcast to follow the trend of the rest of the MVPDs.

So is the market -- presumably, the market knows that you've got most of these renewals under your belt. Are they nervous about something insidious underneath the hood like tiering of the RSNs, where they get nervous about the monetization associated with a carriage renewal? Or is it just the inefficiency just staring you in the face and that there is no explanation for it?

Well, look, they're clearly taking the -- what happened with DISH. We're off on DISH. I don't think that's a permanent situation. I think if you're going to go without key anchors within the pay TV offering, you're essentially choosing to be a niche offering for the long term. And so I don't believe that's ultimately what DISH will want to do. I don't believe that's what the other distributors want their product to be. And so I think it's just more of a moment in time. But I think investors are looking at what's -- what happened there, which is a little bit out of our control, because it happened in between signing and closing. And we didn't have any -- our TV stations weren't up at the same time. And so -- and they're just projecting that forward on to other distributors.

That's interesting. I mean, it seems to be that DISH is always known for being maybe a more difficult negotiator or -- but I would say, even on top of that, they're going through their own sort of strategic pivot, right, where he may indeed be trying to just maximize cash flow as the video business goes away and he sort of stands up something on the wireless side, right? I mean it may not even be a proper analog for someone that's really in the TV license.

Right. There's no doubt that they're super-focused on being a wireless connectivity provider. I mean Charlie will tell you that right to your face, and he's not hiding that. And that's their focus, that will be their focus. But right now, all their cash flow and all their value is on the DBS side. So it's not like they're going to ignore that business, but it's clearly not the focus of DISH going forward.

Okay. So can I -- can we talk about -- because this is -- I get it less today than I used to 5 years ago. But the buy-side, in general, says, "Well, if you want to know why traditional pay TV is so expensive, all you have to do is look at sports costs." And that's the RSNs and ESPN, right? And then on the flip side, you've got companies that are in the non-live business like Discovery or Viacom. And they'll trot out statistics and say, well, we get -- I'm going to make these numbers up. We delivered 12% of all ratings, but we only get 4% of the affiliate fees, right? And so it's almost like implying that there's like a catch-up trade on the affiliate side for the guys that are doing scripted or nonscripted. When I went through that math, it -- of sort of share of viewership versus share of ratings, of course, it showed anyone that had sports in their portfolio was sort of "over-earning" and anyone that was underneath that line was under-earning, right, Discovery, Viacom. And then it just sort of begs the question, well, why is a pay TV distributor willing to pay so much for sports in the first place? And so we thought, okay, this is easy, it must have to do with the audience that they deliver, like that's sort of obvious. And so we went through and just looked at the average Nielsen ratings. So there was like no correlation between the number of customers a pay TV firm lost when they lost sports carriage versus those average viewership numbers. And then we went back and reran it and it -- what it ended up being, it was all about the peak hour of viewership relative to the average, right? That's what really drives the losses from a pay TV provider. And what's always -- does that make sense, what I said so far?

It does. And what you're seeing there is a tentpole. A tentpole that holds up the whole tent. You remove it, the tent falls down. It doesn't matter what else you have. And that -- and those spikes in viewership are -- it represents tentpoles. And you -- it doesn't matter, you can fill in with all sorts of other stuff, it's interchangeable. It's what in the industry we call to that vapid ratings. So -- and general entertainment isn't exclusive anymore. Sports is the only exclusive. It's the only way to get sports -- the sports that you care about are -- is via pay TV. There's no other way around that. Whereas even the best general entertainment programs, there's multiple ways to access it. So not only is it not exclusive, but for the most part, it's what we term vapid, which means that it's totally interchangeable with another program. If you have a subscriber and he's looking for general entertainment, he -- and a show is not there, unless he's some sort of like avid fan of that show, he'll go find it somewhere else. But otherwise, he'll just watch another general entertainment program. Not true in sports, can't do that in sports. That's what makes sports so unique, and nothing is going to change that in the foreseeable future. And so that analysis that you did that showed those high ratings, like all the -- and you see that through the RSNs. I mean you see key teams in their markets with big ratings. Any given night, they're the #1 show on television. So you'd see those peaks. Now the RSNs, admittedly, the rest of their programming, total waste of time, nothing going on there. That's why when you aggregate their total viewership, it doesn't look that impressive, because there's really nothing going on, on the rest of the day -- the time period. So we think that's a big opportunity to upgrade those time periods, because it's just empty shelf space. But it's those tentpoles that are important, and it's not just that they have high viewing in that few hours that they're on, but it's also tied to the passion of a viewer. And the more passionate the viewer base is around that product, and if it's the only place where you get that product, that viewer base will change behavior based on the availability of that product. And that's really what you're seeing in the data.

So can I just add one other thing? My hypothesis in terms of the cord cutters, right, that are going on is those are generally the people that don't care about sports and news, and they're finding there's plenty of stuff outside the linear ecosystem. And what that means is, sequentially, as investors are looking at their cord-cutting numbers continue, the corollary observation is who's ever left, the content that an RSN has or news has actually is more important on the margin for whoever is left, right?

You're absolutely right. And when you break down cord cutting, it is absolutely skewed in a huge way to people who just care about general entertainment. Because if you're only -- if you only care about watching a few good series or whatever, why would you subscribe to pay TV? There's so many other choices now, go get a Netflix subscription, go get a Disney+. Now you'll have HBO Max. I mean there's -- put up an antenna. So it's -- it just -- you have so many other choices and you have such a massive oversupply. And I've talked about this in many conferences about what used to be called peak TV and now essentially called the streaming wars, and it's just a -- it's a sea of blood. It's such a massive oversupply, combined with a growing number of distribution outlets, equals no pricing power. And so it's not a good setup for long-term business, which is the reason why we wanted to limit our exposure to that area.

That makes perfect sense. Does anyone have any questions for Chris? None so far. So can I ask one other question on the ratings side? So -- and just tell me if the buy-side, do you feel like they're up to speed on this or if my sell-side competitors are. But one of the struggles we've had to really dig into the RSNs is we just buy national ratings from Nielsen. Do you feel like in the investment community, there's pretty good information about sort of ratings for an RSN? Like is that data...

No. That's -- and in fact, it's not even that good in the advertising community. So if it's not good in the advertising community, it's terrible in the investment community. Because the -- in fact, we sell the RSNs based on local ratings on NSI, not NTI. And then we don't even pay attention to the other dayparts, the throwaways, right? And so yes, that -- look, that -- the best -- what I can tell you is that if you aggregate up the viewing in any market across all of our RSNs that we own right now, just the games, pre and post, you compare -- you aggregate -- the aggregate viewing of those and you would get 1.3x the minutes viewed of the top 10 entertainment programs in that same market combined. So that gives you an idea now, those are the top 10 entertainment programs. That's like The Voice. That's -- those are the big ones that you all have heard of. And so there's more minutes consumed on those games on the RSNs in aggregate than there is on all of those programs combined. And so I don't think -- you can't see that in the national ratings. Because the national -- when you look across the whole channel, across the whole 24 hours, the rest of the dayparts are 0s in RSNs right now. Again, an opportunity for us, but it will skew your overall picture of -- on this whole notion that, that somehow you should be like $1 per rating points or minute -- the hour viewed or something like that is totally incorrect in terms of what really drives the business, which is -- just goes back to what you had discovered before when you were trying to figure out pricing, right?

Right. Makes perfect sense. So you have RSN agreements across 14 MLB teams, 16 NBA teams and 12 NHL teams.

16 MLB, I believe.

16 MLB, maybe I excluded -- okay. Maybe I excluded the Cubs.

Cubs and Yankees, yes.

Yes, probably. But in December of last year, the MLB sort of voted to give these unauthenticated rights to the actual teams themselves. What does that mean in practical terms? And what is the implication, if any, for that slice of your RSN content?

Well, on the one hand, it's not -- really not that important because no one uses those rights, right? There's no such thing as direct-to-consumer offering. But on the other hand, it's a very positive development.

Positive?

Yes. Because once it goes to the teams, it then becomes available for us to acquire. We're not in the business of necessarily making our product available direct to consumer, but now we could be. And any new deals that we do, those rights will just be wrapped right into the base agreement. And so that was the one. In terms of our rights package, we already had direct-to-consumer rights for NHL and NBA. We didn't have them for MLB. So this was the last piece that we were missing. And now that -- we don't use any of those, and everyone is fine with that. But having the option to use them is a good thing.

And so would that mean if you exercise the option to use that, what does that...

Well, I mean it -- it's -- it means that if we wanted to go direct-to-consumer, we could, okay? That would be a departure from our business model, which is to sell through distributors. And I don't see that changing anytime soon. So I don't -- I'm not predicting that there's going to be a direct-to-consumer offering from us anytime soon. But I'd rather have the rights than to have them just sit out being squatted on by the League.

Understood. Okay. So can you -- since I excluded Marquee, which is the Chicago Cubs, and YES, when I sort of gave the number of MLB teams, can you talk about both of those agreements, which I think are a little bit different than the other MLB?

A little bit different, not tremendously different, because the -- through the Fox Sports portfolio, we do have significant ownership from MLB teams across many of our RSNs. And so yes, this is like a really extreme example of that where we're only 20% of YES, since the majority, like, we earn are on our other RSNs. But we fill -- fulfill a very similar role there, and we do the distribution, we fulfill a bunch of the back office and make sure they're using best practices, things like that. But they're probably the most independent of our operations in terms of the amount of functions that they have, I guess, already compared to what we provide them. And the big thing we provide them is -- for is distribution when we've done -- it's gone incredibly well for YES. And they're just a great network, great network to have in the portfolio. And then the Cubs is a little bit different, because it's a start-up, starting a new RSN around the Cubs. So it'll be Cubs-centric. They're probably one of the few franchises that could pull off a single team network, because they're such a powerful franchise in that they are the Cubs. And so what's interesting about that -- and that's a joint venture between us and we, again, fulfill -- they're probably slightly more independent than some of our other RSNs, but we do distribution and we do all the back office. We essentially manage it for them. And they were faced with the decision of they knew they wanted to be on their own. They could have just said, "You know what, we'll just go to launch this ourselves and be our own RSN." And they smartly realized that even as powerful as the Cubs were, that was not going to be a great risk-adjusted decision. And they partnered with us, and it's been going great so far.

Have you disclosed what the split is in terms of the partnership between you and the Cubs?

It is -- it's a joint venture. That's just what we said.

Okay. All right. So we talked earlier about sports betting and the opportunities that may afford itself. This is just my own naivety, but when I sort of think about typical ad, I'm assuming that the biggest driver of this is going to be to help advertising. Is that a fair...

That's just the tip of the iceberg. So...

Okay. Is it the easiest?

It's the easiest. And so far, when markets roll out, the rates have been at significant premiums. So that's a nice sort of, okay, a new market opens up, all the players want to rush in. They're willing to pay up for prime ad inventory, which largely happens to be our ad inventory, because we can target a specific market with a specific team. For -- they don't want to go national advertising on ESPN, because they want to go market-by-market, state-by-state. That's how this is rolling out. And so -- and then right now, it's...

Can I pause you there, because that sort of confused me a little bit. So I sort of think of the person that owns the content sort of having -- in the traditional cable net world, the national advertising and the pay TV company or the distributor having the local ads. And in RSN, you said if they're doing local, that's our inventory. But isn't it also the distributor's?

Yes, the distributors will get their 2 minutes per hour. But the rest -- most of the inventory is ours. And the reason why we can do local, because we're not in these national accounts. We're regionally focused. And so as states light up, we're a natural place to go because we can just give you that market. You could still go to the cable companies too and buy through their interconnects, and I suspect that will be good for them too.

Okay. Sorry, I didn't mean to interrupt you.

Yes -- no, no, it's a good question, because as -- in -- throughout cable, there is a shared inventory component there. But the national channels can't localize. They don't have access to local technologies. Now we can't localize either, but we're already local. So that gives us a big advantage on the advertising side. And like for sports betting, there's really 3 ways we think about it. The advertising is just, as I said, the tip of the iceberg. And by most estimates, that's $1 billion to $2 billion of new money that's coming into the category or into the industry that's going to be directly targeted at our ad inventory for all the reasons we just talked about. So that any time you get a new advertiser coming in, pressuring the inventory that your existing advertiser is already buying, that means higher CPMs. And so that's -- you always want to have new entrants. And then the second thing is that it's going to be a huge boon for fan engagement, which I mentioned earlier when we were talking about that, and I think about that really in 2 prongs. One is that it will add interactivity, which we think is vitally important for the younger generation. And when you take a look at the stats and the demos on sports betting, it's the exact opposite of the viewing trends for sports, right? Sports SKU is older viewing, sports betting SKU is younger and quite significantly. So ages 18 to 35, 40% of that generation, including females, this is not like cherrypicking males, 40% are already doing some sport -- some form of sports betting, and 60% are interested. So that means if you make it easy, you get it on their phone, you can move that 40% up to 60%, which is a staggeringly high number when you think about it. And it's not anywhere close to the amount of people in that generation that are actually watching sports. So -- and once you start sports betting, you are -- you become a sports watcher. 97% of the sports betters are sports watchers, okay? And so we think that's incredibly important for the younger generation. And then the second component of that is having skin in the game, right? This is a natural human psychological phenomenon, where if you've got something to lose or win, at stake, you're going to be a lot more focused on it. And it's the same reason why -- like, I'm a golfer and I'll bet $5 on a round. Do I care if I win $5 or lose $5? Not really. It's not going to change my world. But it makes me focus more on the game, which is one reason why I do it. And so -- and then the third aspect of sports betting from our perspective is we see the convergence of the sports betting and the sports viewing experience. And if you take a look at what's happened in Europe and other more developed markets, in Australia, you can get a glimpse of this. But I think this is -- U.S. is -- as the U.S. typically does, we'll take it even further. And right now, you're seeing about 70% of the action is pre-game betting and 30% is in-game betting. That's going to flip. It's going to be, most people are predicting 70% in-game and 30% pre-game. And that's -- you're seeing that overseas where they're more developed, in-game continues to gain share as online is rolling out here in the U.S. And in-game betting will not only expand the old pie, because there'll be more betting going on, because you're doing shorter time periods and you're doing prop bets. But it also is going to make the viewing experiencing -- the viewing experience much more engaging. And it's going to work -- and you don't bet in-game unless you're watching. So you can imagine the sports betting and the sports viewing experience is being completely integrated, where you're interacting as you're watching and you're putting on new bets as you go. So it will both expand the pie but also really tie in the sports betting and the sports viewing experience together.

Super helpful. Yes, go ahead. Sorry, do you mind just hitting the button for the webcast, sorry?

Just wanted to go back to the streaming rights that you mentioned and specifically connected to Amazon's investment in YES Network and maybe suggest that's -- some of the concern that investors have as to what's going to happen to the streaming rights and what role do you expect the Amazons of the world to play in that environment?

Well, so the move by MLB was important for our partnership with Amazon and YES. So that now enables YES to distribute to Amazon and for Amazon now to put a certain amount of games over-the-top, direct-to-consumer or whatever. They have a number of different things they're going to do. And so -- I mean the reality is the Leagues -- the League was squatting on those rights before, so the League could have done that at any time. And now they've pushed those rights down to the team. So that's good for us. And that opens up what we're doing with Amazon and with everyone else.

Yes. Can I just ask a follow-up to your question? Is your sense that the market is nervous about Amazon is going to come in and just sort of move into the RSN space in size or...

Yes. I mean [indiscernible].

No, I don't see, in some way -- where there's -- where we have an existing RSN, where somehow there's like an off-stream of like DTC going to someone else. That's not a realistic outcome. It will either be in partnership with someone like that, like at YES, Amazon owns a piece of YES. They're at the table with us strategizing about how to do this. They pay YES a fee to get the games that they're going to get. And then they -- by this move that MLB did, this enables -- before, YES didn't -- technically couldn't do that. With Amazon now, YES can do that with Amazon.

Just because Amazon is an equity partner. Is that what you mean?

No, no. Because MLB moved the rights down. So if MLB hadn't done that, Amazon's investment in YES would have been moot. So those type of arrangements, distribution via other players like Amazon are now a possibility because of this move. I said there will always be a possibility on NHL and NBA. It sort of completes the package that's available to us. And new deals, as I said, will just -- it will just be all included.

So do you see anything additive in the sense that [indiscernible]?

Yes. I see the -- to the extent there is going to be some sort of over-the-top or direct-to-consumer offering, like in the case of YES, it's not the whole RSN. It's just a subset of games. The compensation for that will stream through the RSNs.

Did that get your question answered? Yes. All right. Very good. So I guess just to wrap everything up, and I think it's been a great conversation. But what are sort of the opportunities that you see sort of for upside in the shares? If you're sitting here as an institutional investor and you want to synthesize everything that you sort of said and wrap it all up...

Yes. Well, like -- the good news from an investor perspective is that there's literally no downside left that I can see.

Less than 0?

It's all been baked in. As I said, the RSNs are trading at a negative equity value, which theoretically shouldn't be possible. The political is going to be huge this year. The amount of fundraising that's happened through this year has broken all records. And the good news about politicians is they never return the money, they spend it. And we're already benefiting tremendously from that and the entrance of players like Bloomberg. We've substantially derisked the RSN portfolio, as I mentioned, of 75%-plus of the subs that have already been renewed for the long term. We're going to be rebooting the digital footprint, like Fox Sports Go. That will turn more of our ad inventory into ad inventory that's targetable, which is 2 to 3x the CPMs. It's going to open up a whole new opportunity set in terms of greater audiences, different content types and then also greater integration with sports betting. I won't get into the whole sports betting thing again. I talked a lot about it, but it's the single biggest opportunity long term in this space not only for RSNs but also for the broadcast side. I mean the broadcast side is anchored by the NFL and other key sports. And so it's going to have a very substantial impact long term for that side of the house as well. And then, of course, there's ATSC 3.0, which is what we're here at CES for. This is why I'm here, not just to come to this conference. But we've made...

Don't hurt our feelings. Come on, no.

We've made major strides this year with -- within the industry. It's a bit like herding cats, but we finally got the networks on board with how we're going to stack the signals on ATSC 1.0 and ATSC 3.0, which have to coexist, while we roll out 3.0. And we've got the consumer electronic companies all announcing this week that they're rolling out TVs for 2020 that will support 3.0. We will -- we've got market commitments on 61 markets, which represents 70% of the U.S. population that will roll out 3.0. We should have prototype phones coming out of India later this year. And it will take an area of the population that we service, 15%, 20% of the population use over-the-air television. It's our least monetized segment, right? I mean the only thing we get out of them is ads. And now we'll be able to target them, which as I mentioned has a much higher CPM proposition. And we'll also be able to offer them subscription-based services. And then on top of that, it'll open up a whole new business lines in terms of automotive and IoT applications which are beyond broadcast, that's just using our connectivity as a pipe -- as a data pipe into the car or doing things like precision GPS. So that's -- we're excited. It's been a long time coming, but we do actually feel like the rubber is hitting the road here on the transmission side and on the receiver side here with TVs starting to roll.

That's great. Well, Chris, thank you very much for your time. That was a great discussion.

All right. Thank you, [ Jason ].

Yes, absolutely.