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

Great. Good afternoon, everyone. Thanks for joining us again. I'm here today with Chris Ripley, CEO of Sinclair. Chris, thank you for doing this, second year in a row. We really appreciate it.

Thanks, Mike...

Pleasure. Good to see you.

So the question we'd ask to start things off is, it's hard, it's almost only 2 months into it, but what lasting impact do you think comes from this period in time? When you think about where we go after this, what changes in your mind from where we were before?

It's a great question. I think it's something that we read in media, I mean, economists, just every business leader that I know of is trying to figure that question out. And I don't have a crystal ball any more than anyone else, so we're all just sort of guessing. But some things that I'm pretty sure on are that work from home has actually worked. It's worked amazingly well for a company like ourselves who -- the historical mindset is that most things needed to be done in the office/studios. And that's being totally blown apart. And so that's happening before our eyes in real time, and it has implications for how we operate on a go-forward basis once COVID goes away. I do think we'll become more efficient, more productive because of what we're doing today and feel we'll be able to have -- give people more flexibility from a lifestyle perspective and actually increase productivity and efficiency to boom. So I think it could be a win-win. And then the other thing that is obviously very clear right now is that media consumption's skyrocketed, and it continues to be at these elevated levels. I think and, again, this is a speculation, but I do think that is going to persist post-COVID. I don't think this is just going to be a blip. Just for instance, our local news ratings are up almost 40% system-wide. And I don't necessarily expect that to -- that level to persist. But I do actually think we're going to have a long tail of enhanced ratings because of that. You're going to have people who start to do more work at home, have more time for consumption of media and then perhaps relying on in-home media more than out-of-home for quite some time as just -- in terms of just consumers and what their entertainment options are, in-home, I think, ends up being a big winner out of this. And I don't think it necessarily is all back to normal when COVID goes away. I think that trend will persist. And then obviously, the big question of the day that I'm sure you're dealing with at this conference that everyone's sort of thinking about on the downside is: Will there be economically driven cord cutting? When you listen to all the big MVPDs, and they just had their quarterly earnings, they all seem to indicate that they thought that may happen, but they didn't see it in their numbers yet. And so they're sort of speculating the people lose their jobs, they can't afford to pay-TV bundle, they cut the cord. And so the -- this could accelerate cord-cutting and then do those people -- does that change consumer behavior? Or do they just simply re-sign up when they get their jobs back as they traditionally would have done through a downturn? People don't know the answer to that, but that's probably the biggest concern about this for the media industry, which I would say, by and large, compared to a lot of businesses, we're in pretty good shape. There's a lot of worse situations that I wouldn't want to be dealing with right now.

No. Yes. We've heard someone describe that. Other thing is hot messes. I'll talk about that later. So let me start with how this pandemic is affecting your business, that's on the advertising line, clearly, local. Given the real-time data you're seeing from your stations, can you help frame this decline compared to the last recession of '08, '09. So how is this different? And what are you seeing in the field relative to maybe the last time?

Yes. Well, look, it's -- just from a high level, it's clear that this is much steeper and much faster than the declines we saw in 2009. We were having pretty good Januarys and Februarys. And then March was fine until the end of March, just fell off a cliff. And that weakness has extended into April and now into May. And the business is being placed in a much shorter time frame, usually 1 to 2 weeks now instead of the typical 4 to 6. So our visibility has been lessened. Obviously, the lack of live sports, that's a whole sort of advertising category that's essentially dissipated. And then it will come back when the sports comes back, but that's been an impact. And as we guided to in our quarterly earnings last week, we think core is going to be down sort of mid- to high 30s in terms of core advertising. And that is with the assumption that there's a little bit of a pickup in the back half of the quarter as some of these states start to open up. And so there is some chance that it's worse than that, if that doesn't happen. And so just to compare that to 2009, the worst quarter in 2009 was about down 20% on the core advertising side. So core advertising is certainly, it's an economically sensitive area, and we're certainly seeing that today. The good news for us and companies like Sinclair is that we are substantially less exposed to advertising than we were in 2009. Just to give you an idea, the company, overall, only 25% of its ad revenue comes from advertising today, and that was 85% in 2009. So huge difference in terms of exposure, and that really is showing now in the model and the financial performance.

Okay. Cool. And as you see states opening up, seas opening up, are you seeing -- what can you tell us about the cadence of advertising that's happening in real time in the past couple of weeks?

Yes. Look, I think it's really early to draw any hard conclusions based on some of the reopenings. We're hopeful that this -- the SBA PPP program, which was targeted at small- and medium-sized businesses, really bridged people through this sort of 2-month shutdown period that they -- that's forgivable in the PPP. And we've talked to car dealers, for instance, and they've been shut down or almost shut down for 2 months now. But if they've gotten PPP loans, basically the government floated them for that -- for those 2 months. And so they are anticipating a backlog of demand coming back and hitting the marketplace and a very quick return to normal demand trends. And the -- because of the PPP loans that they've been -- they've received that are forgivable, they're able to just -- their financial resources are not strained at all. And so I actually think there's so many things different here that we don't really have historical reference points for, like the amount of stimulation, the amount that -- the fact that this is the first sort of -- since the Spanish flu, which was so long ago, the economy was so different and you really can't draw any parallels, and then there was no mass quarantine done in the Spanish flu. So there's just -- there's so many unprecedented things about this, but there is reason to believe, especially with all the stimulus that the markets will bounce back pretty quickly. My biggest concern is really just the consumer behavior front, just having less economic activity as people return and they just decide to not do that extra dinner out or not go to the movie theaters or not go to a concert, all that sort of adds up to the general economic outlook.

Okay. Can you talk about political for a second? Really strong first quarter. It looks like the money was in, in the first quarter. Have you seen any changes to political spending? And what's your view for maybe the acceleration or the concentration of political spend over the back half of the year?

So yes, political has remained strong. We are still expecting to have a record quarter. What I'd like to say about politicians that makes them such great advertisers is they never return the money. Whatever money they raise, they spend it. So -- and they have a limited time to make an impact. So they really are the perfect advertiser in many ways. And we had a record first quarter on political. There will be less in Q2 because the primaries pretty much are over. And so -- and then from a timing perspective, it really heats up in Q3. October is a huge part of the equation in terms of political advertising, it's probably like 50% to 60% of the total in that 1 month. So that's where it's concentrated. And there's been a record amount of fundraising done by the various parties. And as I said earlier, whatever is raised is spent. So it's still a good setup for political advertising.

Okay. You referenced this in my -- in the answer to my first question on what's going to change. I wonder on the cord-cutting front, do you expect the rate of cord-cutting to accelerate. So what -- so what are you thinking? What are you planning for? And then what do you do to prepare if it does pick up, what changes within your organization, your strategies if it does pick up, cord-cutting measures?

Yes. So look, it's a tale of 2 cities, like I mentioned, on the one hand, consumption is way up. People's reliance on us is way up, right, especially as it relates to local news. People's desire to see local sports, which, I think, will come back at some point this summer on a fanless basis. But we won't be too far away from being able to see that. In fact, we just reopened the tennis market last weekend in West Palm and did the first U.S.-based pro tennis tournament out on tennis channel. Weekend before that, we did it in Germany, too. So local sports are coming back. I'm fairly certain about that. And the demand for it is very, very high. We just did a survey recently that says 23% of people are ready to upgrade their TV package to watch live sports when it comes back, which is a pretty high number in terms of these people like upgrading their package from maybe one tier to another. And so we think the demand will be very high for local sports. So you've got, on the one hand, consumption way up, people relying on it way more, people wanting it much more. But on the other hand, you've got just the cold, hard economics of people losing their jobs, having to make cuts, et cetera. So hard to say how that pans out. But I think net-net, I would -- I think that augurs well for when those people do get their jobs back, that they will come back. And so just to answer your second question, how do you prepare for this? Well, in some regards, we've been preparing for this for years. We have dealt with a challenging core advertising environment for quite some time. So we've always known that we need to focus on new revenue streams, and we've been doing that over the years. We've built a pretty substantial digital and digital marketing services business through our sales force. We're always looking to increase our ad yield. We're going to have big opportunities there on the RSN front. And we have a multi-platform focus. And we've had that for many years now. We look to be on all platforms where our consumers are. And the next frontier for us is going to be direct-to-consumer. We're dabbling a bit in it with STIRR and NewsON, but the next wave will be more substantial. And we -- that's going to be a big part of our growth story going forward. And then we're doing little things as well like we're going to run an ad campaign on the benefits of pay TV. I just don't think people focus on what incredible entertainment value it actually is. And so we're going to use some of our own airtime to tell people just that.

Okay. You talked to, I'm sure, all the leagues, all the team owners. What's the current thinking on when baseball, hockey, basketball come back? So if you're in our shoes, what's your expectation for seeing those sports come back?

Yes. So as I mentioned, tennis is already back, and it's not the full stops yet. It is -- they're doing exhibitions, but it is professional tennis. And then in terms of NBA, NHL and MLB, there's a lot of speculation. No one knows for sure. But one -- a few things that I do know is that the leagues are very focused on restarting as soon as they can, obviously, safely and responsibly. And they're willing to do it without fans. And so that's a big -- that's not an easy economic decision by the way, there's some trade-offs there. And there's some shared pain that probably has to go around, including to the players. You're not going to have gate revenue. And so that's important because most people don't think a vaccine is going to be around until sometime next year widely distributed, and are you really going to put 30,000 people into a building when there's no vaccine yet. So I think July is a -- has some potential for some of these leagues to restart around then or maybe August. So anyway, I think it's really a return this summer.

Okay. And then I know you gave guidance on the call, but that -- let's assume for second quarter, there's not a lot of sports. Do you want to remind everyone of what the impact is on your RSNs, not a lot of sports and therefore no advertising at the...

Yes. Yes. There was a lot of concern, I think, early on that this would be sort of the fatal blow to Diamond Sports, but it's actually a remarkably well-hedged business. This -- the idea that certain games wouldn't be delivered or less than or none would be delivered had already been contemplated, not by us, so I can't take a credit. This was Fox and others who were dealing with things like strikes, primarily that was what the focus was on, like what -- because strikes have happened, seasons have been missed due to work stoppages. So the contracts are very clear. There -- we'll certainly have -- I am expecting there to be a rebate situation where we'll all have to send some money back to the MVPDs because we don't hit our minimum game thresholds. We won't know that till the season -- till we know what's going on in the season and how much we'll actually deliver. But that revenue goes down, but then there's also rebates from the teams. So the teams underdeliver to us, then the money sort of flows through, and it's -- [indiscernible] and so that's the 90% of the revenue on the sports side. Same is true with tennis, by the way. And so then you've got advertising, which is a much smaller, which is only 10% of the sports revenue. That does go away. But again, there's offsetting costs that go away in the form of production costs. And so those 2 numbers are very similar as well. And so it is a remarkably well-hedged business.

Okay. I saw a report early on that if the teams play baseball played out of their local market, there is impact to RSNs? Is there anything true to that the teams have to play in market? Is there any contract terms on that?

No. No, I don't think that's accurate. We have -- certainly, look, if they end up delivering less games, if for some weird reason, it doesn't matter how -- why they weren't delivered. They would owe us money back for that. So in some sense, we obviously want to get as many games as possible. Don't get me wrong, but we're protected if we get less. And so -- but the way our contracts work is not -- they're not tied to a location now. We can only broadcast within a certain geography, but like, for instance, we take a -- when the Royals are playing in New York, we deliver that game to the Royals region. They're not playing in that region. They're playing in New York.

So it doesn't matter?

Yes. I'm pretty sure it doesn't matter.

Okay. Cool. Let's stay with the RSN topic because that's -- a year ago, when we sat down after the deal was done. Could you share with us how negotiations have gone relative to your expectations over the past year? And then do you have confidence that those RSNs will still be carried on big basic and overall major virtual and nonvirtual distributors?

Yes. So things have gone pretty much as expected. Since we bought, 70% of all the subscribers of the RSNs have been renewed for multiyear contracts on status quo terms like we talked about when we were leading up to the transaction. There's really just 2 major MVPDs outstanding that have not gone through this renewal process with us. And that one is DISH, which we all, I think, know quite a lot about at this point. And I don't have any new updates there, if you want to know. And then the other is Comcast. And the only reason Comcast isn't done yet is their expirations were later than everyone else's. And so the broadcast side and the RSN side come up this summer. And we expect to renew on a [ status quo ] basis with Comcast as well.

And is your goal to make all these renewals coterminous going forward? Is that maybe what can happen with DISH longer term?

Sure. Yes. No, that is the goal. And it's already been largely achieved, absent DISH and Comcast, which Comcast was already like almost on top of each other anyway. DISH had the biggest spread -- it's about a 2-year spread between the 2 expirations. So it's largely -- and everyone else is now coterminous. And as we achieve renewals with others, they'll be coterminous as well.

Okay. If we talk about -- when you presented last year to us, you said, look, the opportunity to RSNs was driving local advertising because Fox, that wasn't a priority for Fox. They were doing some other things, right? So I know it's early days, but could you give us any update on how that integration has gone and any signs of success that you can point to?

Sure. So yes. Look, you always have to be skeptical when CEOs start talking about revenue synergies and so -- but I'm happy to report on this one, that there is -- it's actually coming through. So in January and February, the RSNs were up double digits on the ad side. And that -- we call it the Sinclair effect, but it's really just a lot of hard work in getting them in the flow on the political side, where they weren't previously in the flow, rolling out all of our digital market services, which we've spent years top grading through our broadcast group. And using this downtime to train all the staff on those new products. And already, even despite the downturn in COVID, they're making sales of these new products that we're giving them. So we've really leveraged the sales force. We've improved their yield. And the evidence was showing in January and February now, obviously, all bets are off with the -- especially with the RSNs, their ad revenue is significantly down because there's no sports on right now. But when the sports return, the advertising will turn.

Speaking of all bets, let's talk about betting because that's another area you're very excited about as an opportunity to drive more, both engagement and advertising. So what's your latest thoughts on the rollout of legalized betting across the U.S.?

I think we're at 22 states right now, 10 with mobile and with dozens more expected over the next 3 to 4 years. I think that COVID could accelerate states going legal because their budgets are just taking a bazooka hit basically because of COVID. So they need the revenue now more than ever, and there's great case studies. In New Jersey, it has been a phenomenal success. And so I think it's -- I think that trend is going to accelerate. I think it's going to be a huge impact on our business. We're very focused on being at the convergence of gaming and sports. We want to gamify sports. We want you to be able to play for money or not for money in an interactive and engaging and a visually engaging way. And we think it's going to be a great boom for not only consumption, but also open up new ad revenue streams. And ultimately, we think sports betting will likely be a bigger economic opportunity for the RSNs than advertising. Maybe not as big as subscriptions, but bigger than advertising.

And how do you plan to accelerate that confluence of gaming and consumption?

So we are in deep talks right now with who's who of sportsbook operators and other partners to be at the forefront and jointly develop some of these new experiences for our viewers. And hopefully, we'll have some more news on that later on this year.

Okay. And would you have to work with the MVPDs as well because as a sports fan, I watched my TV through my [indiscernible]. How do you integrate that with the MVPDs?

I think we will be able to integrate new experiences within certain MVPD solutions. Just depends how capable their boxes are and their systems and whether they have open APIs and things like that. But to the extent that we aren't able to technologically deliver new experiences through the MVPD, we will have a second screen sort of simulated experience that you can do -- you can watch your linear and just -- and then get a simulated second screen experience on your phone.

Okay. Cool. And in those -- in the states that have opened up gambling where you have RSNs, what have you seen in terms of either usage or appetite? Is there anything detectable at this point from early signs of gambling into new markets?

Well, what we do see quite -- the most obvious and largest impact is on the advertising side. When a state goes legal, the sports betting operators quickly become your biggest category, and they pay significant premiums to the going -- the average unit rates because they're all, and rightly so, focused on being a first mover and grabbing as many players as possible. So you get a -- it's a huge plus on the advertising side when they go legal.

Okay. Earlier this year, Major League Baseball changed some of its streaming rights, I guess, relationships with their teams. They gave back their digital rights, I believe, to the teams earlier this year. What does that mean for you? And how do digital rights come to market in baseball?

Yes. So look, we already stream all of our products. We just do it on an authenticated basis. What you're referring to is the direct-to-consumer rights, which we already have on NBA and AHL. MLB was sort of the last piece missing, and now that change makes those available. So that's -- it's really good for us. And we -- all new deals going forward will include those direct-to-consumer rights. And the process, though, for transferring on existing deals is still to be completed, but something we're working on. So anyway, the -- it really rounds out our rights. And then we're doing a lot of work right now, trying to figure out how do we roll out a product set around this that will be accretive to our viewers in terms of giving them what they want and the type of access they want. But also something that's complementary to the existing distribution ecosystem. We don't really -- a lot of people see this as a zero-sum game or a either/or. We don't see it that way. We think we can have direct-to-consumer products that are complementary to the existing distribution paradigm.

Do you assume the way we do that if you're paying for the bundle today, you're a sports fan, and therefore, if you're not a bundled subscriber, you're not a sports fan, so the TAM opportunity outside of the bundle may not be that large? Or do you think there's a TAM opportunity outside the bundle for people who cut the cord who are sports fans?

It's an interesting question. And we're doing a lot of research on that right now. And there's more sports fans outside the bundle than you may think. And that's -- the early indication is that -- and who knows why, maybe that was economically driven. We haven't quite figured that part out yet. But we were surprised to see how many. And fandom is so broad in this country, just to give you an idea. 70% of Americans self-identify them as fans of either MLB, NBA or NHL or multiple. 70%, okay? And that's like -- and that's including females, males. So it's -- fandom is very strong in this country. It's very widespread. And so there are more sports fans -- There's certainly a greater preponderance of sports fans in the bundle. No doubt about that. But there is opportunity outside the bundle for other offerings.

And this is the question I asked earlier to David Zasloff, how do you introduce a package that's complementary to your core business, that's additive to the ecosystem? So then thinking through the pricing, the bundling, what types of offers you're thinking about to bring people into your nonlinear offerings of people who are outside the bundle? And thus -- but also not disrupting the economics of your business?

Yes. We haven't -- without having -- getting into the details of our specific product plans, which are currently confidential, I would say, just broadly, it's really just a matter of thinking about this in one level of sophistication more than just, hey, I have an RSN today that I'm distributing through cable companies and satellite companies, and now I'm just going to make that same product available on a direct-to-consumer basis. That's not the answer. At least your content up into more packages, you're going to offer more content than you historically have because on a streaming basis, you have unlimited shelf space. On an RSN, you have a channel and you can only put x on it. So you have more shelf space, you have a chance to offer fans who want to go deeper with the teams, with the players, you have a chance to upsell them. You have a chance to segment your viewer base and offer products that hit the super fan, the super to medium fans, the medium fan to the casual fan. And then you could stratify your products based on their desire to engage and their desire to pay.

Okay. You talk a bit about -- I know COVID impacted your strategies and goals for the Marquee RSN in Chicago. But how was that going up until the recent pandemic and your views on long-term goals for the strong RSN?

So launch of Marquee has gone very well. It's a great product, great studio. Obviously, it'd be better if the Cubs' games were actually on there right now, but they're actually doing a pretty good job with what they have. And so kudos to everyone in Chicago for getting that done and just doing a fabulous job. We achieved all of our expected distribution deals, all except for Comcast, which has been widely talked about. So no secrets there. So essentially, though, we got it -- just one piece of the puzzle missing. Great-looking channel, great-looking product, just missing one key distributor, and that was just a matter of timing. I think Comcast would have been up already if the season had started on time. The season didn't start on time, and so what's the point, right? So we expect that to be resolved as soon as we understand when baseball is going to start up again.

One last RSN, I want to ask some others, the rest of your business. There's been a couple of RSNs that come to market lately. You guys didn't pursue those or maybe they never came to market. Well, understanding your interest, your tolerance for maybe doing some more RSN additions at this point.

Yes. Look, we're always open to transactions. We're historically a consolidator. That's -- a big part of our DNA is rolling things up. We think we get synergies out of doing that. We add value out of doing that, but we do continue to be very disciplined on price. And so has to be the right properties at the right price, but we're certainly open for business on that front for the right opportunities.

Okay. So let me turn to -- and you said this in the beginning that the -- your company is very different than it was 10 years ago. A big part of the story is retrans or reverse retrans. It's a question I like to ask network affiliates, how are you thinking about the relationship between your retransition growth and then the fixed amount of dollars back to the network? So how do you basically balance the demand to actually keep your shareholders' growing revenue stream and yet paying back networks that increasingly need more of your licensees to pay their bills?

Well, I don't know if they need more, but they want more.

They want more.

The -- look, as I like to say, you don't pay your bills with margin, you pay your bills with dollars. And what we're -- we have been focused on and have been successful in doing every year has been to be able to grow the difference between what we take in from the MVPDs and what we give out to the networks or what we call net retrans. And so we've been able to continue to grow that, and that's really what pays the bills at the end of the day. Certainly, the margin has gone down. But that's not what pays your bills, it's the dollars coming in the door and those continue to go up.

And if cord-cutting picks up, you're still confident you're able to deliver the -- you'd be able to actually see a growing contribution from the net of those 2 things?

Look, there's no doubt cord cutting makes that more challenging. But when you -- we don't renew our network deals for terribly long, usually like anywhere from 2 to 4 years so that you can make adjustments when you come back to the table.

Okay. Speaking of adjustments, this is a long question, so bear with me, okay? So last week, as you know, the NFL announced an exclusive national game with Amazon, which will add to the number of games available to viewers outside of the broadcast system. The step-up makes it -- makes some of your most coded programming by viewers and advertisers available on an alternative platform to your stations and what can be seen as a free environment, and couple that with the perception of a recessionary environment where consumers are looking for ways to save their money, it actually moves potentially more people to an OTT environment outside of broadcast. So we focus a lot of our attentions on the networks and the renewals of the NFL, but you and your stations that contract for retrans with all distributors. So as one of the largest owner stations in this country that carry NFL, how do you think about the importance of the NFL renewal by them? And then they have a silver case that more and more of the NFL broadcast may leave the pay ecosystem, right? So I'm sure you saw it as well. You have a reaction to that.

Sure. So look, first off, I'd say we're much more than just the NFL. We have a whole plethora of programming, other sports, local news, primetime, daytime, there's game shows. And so look, on the broadcast side, it's strength to strength to strength. So NFL, no doubt is important, but we're much more than just NFL. So our model doesn't live and die just based off the NFL. And there, you may see some minor amount of [indiscernible] like you were just referring to with Amazon. But from everything I'm hearing and expecting, you're going to largely see status quo out of the NFL in this next round of renewals.

Okay. So if we're hearing significant cost increases for the NFL, are you assuming that whatever the increases will be from the networks, there's going to be a build come and do for you to pay a similar type of increase along the way? So how do you think about that given all the headlines of inflation that's coming?

Sure. Well, look, we have historically always contributed towards the NFL contracts. That's been a part of many of our network affiliation agreements for quite some time. Generally, it's a pretty small percentage of the overall deal that the affiliates end up covering. The network does the deal for lots of different reasons beyond just charging us more. So we pitch in when these new deals come around. But you also got to remember that we have been through the last -- it's night and day, if you compare back to the last recession, for instance, in 2009 to now, what we used to pay them then and what we use to pay them now is, I mean, orders of magnitude different. And so they have a lot more resources now. They have a lot more cash coming in. And so they are in a much better financial position than they were 10 years ago.

Let me ask you 2 more. If any questions from the room, please send them to me. First question, as you mentioned it in the beginning of how working from home work is different. People are maybe rethinking how to do things. Just broadly on the cost side for your company, are there any things that you're thinking about on the cost side that gets redefined or reexamined during -- from coming out of this period in time, I wonder what changes on your cost structure.

So look, we reacted pretty early to COVID and really tried to tackle nonessential expenses, discretionary expenses, and that's one of the reasons where we outperformed our expectations on Q1 EBITDA. So we pulled those levers. As we think about the business going forward, I think there will be areas, as I mentioned earlier, of greater productivity and efficiency, especially as it relates to the production side and the back office side of what we do. And so what we're really trying to do through this downturn is learn as much as we can in terms of how people are behaving, how productive they are, how can we optimize our systems and our processes and our labor to -- based on these learnings. And so right now, we haven't made any conclusions yet, but we're in a learning mode. And just to give you one example, a real-world example that's going on right now is that we have -- we're producing a new DISH cast for one of our markets, in our smaller markets in Florida, out of West Palm Beach. So it's out of a different market, and it's done with one person on a green screen on about $10,000 worth of equipment. So -- and we're live with that. And it's a smaller market. You obviously wouldn't do this in New York, but it's proving to us that we -- and it's a great -- it's a [ good-looking ] product. So you -- it's maybe not quite what a traditional shiny floor studio model would produce, but it's probably 95% there. So that's just sort of in beta right now. And it just points towards being able to do a lot more robust.

Okay. One more would be on cap allocation and usage of cash flow. I know you bought stock back in the first quarter. I know you basically repaid some debt. So we're in a strange time, but how are you thinking about whatever cash you have coming in, how the allocation is going to be and sources of cash?

Well, we have -- on the STG side, we really think about it in 2 different silos or buckets. We have 2 different credit groups. And we're well on our way to -- well, I mean, look, the broadcast side will certainly have less EBITDA because of COVID-19, but we think it will rebound next year, sort of back on the trend line. So we were well on our way to hitting our leverage target on the STG side. And we don't think our path there has really deviated significantly. So we have been allocating more dollars from the STG side to repurchase equity. And then on the Diamond side, it's been all about deleveraging. And obviously, if we get DISH back, that could change things, but we don't know whether that will happen or not. So we're focused on with the cash to delever there.

And here's my last question. People who want to send in, please be my guest. The question I have for you is, there's a good chance coming out of this that Google, Facebook, Amazon are stronger than the consumer world. Your industry is still heavily regulated with caps that are in place for a long, long time. Do you think that we get a change to the regulatory landscape on a national collapse or any change that you see post this crisis?

You broke up on me a little bit in the very beginning. I got the question at the end. I don't know if there was something in the beginning?

Well, the point at the beginning of the question is, there's a good chance that these national digital players will be that much stronger coming out of this, right?

Right.

And then relatively to be how much weaker because they're going to have a -- they're rowing coming out pretty quickly. So does that change at all the regulatory landscape? Because it seems like a very uneven playing field between the digital winners and just the station industry and how it's tracking and it's fragmenting?

Yes. Look, it's a great point. In many ways, we are competing for attention, for ad dollars, for -- with the big digital companies. And they've gotten so big and so powerful, and we're so small compared to them. And I think people, certainly in D.C., they get that. They're -- hence, you see all this attention given to big tech. But unfortunately, I think the government sort of answered that maybe to try to make big techs smaller, not allow other companies to get bigger. And at least that's sort of the way the democrats are thinking about it, maybe the republicans not so much. But we're just -- we're such a overregulated industry overall. I just can't -- there's no real logical reason to continue that. And if -- but for the courts, by the way, that reality would have come to pass. The FCC did do a valiant effort to try to deregulate the industry, but the third circuit of appeals just won't let them do their job. So they are appealing to the Supreme Court, and I hope the Supreme Court takes it up and breaks this 20-year log jam we've had with the Third Circuit Court, the same judges, just for whatever reason, not allowing the FCC to do their job. And so it would be great if the Supreme Court picked that up and actually broke the log jam. And I think they would end up -- if they did take it up, I'm pretty sure they would find in favor of the FCC and allow them to move forward. And so that would be big. But absent the courts right now, I don't see anything really happening on the regulatory front until after the elections.

Okay. Well, Chris, we'll leave it there. Thank you for doing this, second year in a row. We really appreciate it. Really do.

Thanks, Mike.

Maybe next year, we'll do it live together. We'll follow up on where we've gone a year later.

Sounds good.

Thank you. Have a good day, and stay safe.

Take care.

Bye.

Bye.