The E.W. Scripps Company (SSP) Earnings Call Transcript & Summary

All right, we have Scripps management here. We have President and CEO, Adam Symson; CFO, Jason Combs; Local Station Group President, Brian Lawlor; and Scripps President -- Networks President, Lisa Knutson.

Let's start with Adam. So last January, you closed ION, and you announced you were creating a new division called Scripps Network that is now made up of 9 free ad-supported national networks. What is your strategy there and how is it going? Can you talk about the free-to-air trends and where you see them going over the next 5 years?

Sure. Well, thanks for having us. It's great to be here in person and to see everybody in person. Last year was sort of one of the continuing steps in the company's transformation. And over the last 5 years, we've really been transforming the company into a much more durable company, a company focused on greater cash flow generation. And you should sort of think about that last move as the transformation of the company into a free television company. We have, on our local side obviously one of the largest local affiliate groups. That business is girded by multiple revenue streams of course, advertising across multiple platforms as well as distribution revenue or retrans revenue. And then we've got the new Scripps Networks, which now is the largest portfolio of over-the-air networks. Each of them reach more than 95% of U.S. households in over the year. They're also moving towards being ubiquitously available on the newer emerging platforms for television, including the connected TV platforms. They're also available on pay-TV in certain markets. And really, the -- I would say it's going exceptionally well. The last year has been terrific. And we -- you can see by the number of times we actually had to update our guidance on free cash flow last year that on account of I think the rebound in the economy, sales execution on our local side and a terrific first year at the Scripps Networks, the company is really well-positioned to participate in the future of television.

That's great. And so you spend a lot of time educating investors about how people were watching over-the-air, and you talked about the need for an option outside of the growing streaming landscape that's very crowded and confusing to consumers at this point. You've even launched a consumer marketing campaign to get people to try out an antenna. What is your goal with that effort and how do you think it will help Scripps?

Yes. So look, to sort of level set, first, about 1 in 4 broadband homes today uses an antenna in order to get free over-the-air television. There was an entire generation that did not realize television was free. And now those consumers are plugging in digital antennas. Typically, they're doing so to identify live scores or local news. And when they do that, they recognized an entirely new universe of premium programming. That's happening. That marketplace has grown to about 35% of U.S. households with no support. And it's happened because people have recognized the value of free television bundled together with their SVOD services. Our work now is going to be to accelerate that growth. We think that that marketplace will naturally grow to between 45% and 55% of U.S. TV households, again, on account of a couple of consumer trends. The first thing is consumers are suffering from plus fatigue, right? We're at the point now that there are so many SVOD services that consumers, on average, are paying $142 for their Internet access and subscription services, which is frankly more than they were paying when they were paying for pay-TV. Pay-TV averages between $95 and $100. So that I think also is part of the reason why we've seen some equilibrium in pay-TV cord cutting. But cord nevers have recognized also that they want to watch their NFL. They want to watch premium programming. And so they're adding on a digital antenna and they're recognizing also that out of the top 25 streamed shows on the SVOD services, virtually all of them are also available for free over-the-air. And our company after our acquisition of ION and the launch of the most recent networks, we have between a 25% and a 30% share of viewing in the OTA marketplace. So we're going to get behind growing that marketplace because clearly, we are in a position to disproportionately profit from its growth.

That makes sense. And just the size of this marketing campaign?

About $20 million over the course of the year.

Okay. Got it. And Lisa, you've recently been talking about Scripps Connected TV and streaming opportunity. Can you discuss that more?

Yes, so over the course of our first year in operation, we quietly amassed the content rights for all of our programs that you can find on the linear side. And we began really in fourth quarter launching each of our networks on free ad-supported networks. So connected television from Roku to Pluto, VIZIO, so on really the top, I would say, the top 9 platforms is where we're targeting. We will continue that cadence throughout 2022, starting with ION in April and really the rest of our networks. As you know Newsy, which has been really, really successful over the top and really capitalizing on that trend that we saw with Newsy and also with Court TV. So as we say, we want to be the free -- the leader in free TV. It also includes free ad-supported television. So it's a nice complement I think to the linear free TV as well as now on the streaming side.

Makes sense. And which are the areas are you seeing the strongest advertising support for your 9 networks? We're talking upfronts, scatter and direct response. And then who are your competitors for those dollars and what kind of revenue growth and profit margins do you expect Scripps Networks to...

Yes, so we compete in the national advertising marketplace. So right alongside Discovery, CBS, so on and so forth. We're not competing in Brian's word for the local dollars. It's really national ad dollars. And then our advertising mix is split between DR, so direct response advertising, general market advertising, which includes scatter as well as a growing CTV marketplace. We saw about 50-50, each of our network, 50% DR, 50% general market. We saw in '20 and certainly in 2021, the benefits of selling our networks as a portfolio buy. So that has been really, really strong for us. And I think you'll see us continue to really seek where we can find the best yield, whether that's DR. Some of our networks are mostly DR. ION, for instance, is mostly general market. We expect to have another successful upfront. So we're selling all of our networks in the upfront here in the next couple of months. And it's really been a -- seeking the highest -- really the highest rate possible whether that's DR, general market or scatter.

Got it. Because I was going to ask about the mix shift, there is a mix shift going on, but it sounds like it's just optimizing for DR and general?

Yes.

Okay, that's great. And Jason, how has your new National Networks business changed the financial profile of the company? And how should investors think about value now since you're clearly not a pure-play local broadcaster?

Yes, and Adam kind of alluded a bit to this earlier. Our free cash flow profile has just changed so much. Last year, we did $280 million in free cash flow. And this year, we're projecting between $400 million and $450 million. If you compare that back to 2019, we were at $65 million. So just a dramatic shift and change. In regards to the investor question, I think that each investor needs to really do a deep-dive analysis of the 2 distinct segments we have and determine the value that each of them bring to the table. On the local media side, we have a scaled broadcaster who has seen core revenue rebound to pre-COVID levels, continues to see growth within sports betting, strong continued growth in retrans and robust political. On the network side, we have a business that is growing its top line at a double-digit percentage rate, while maintaining really strong 35% to 40% margins on the bottom line. So I think when an investor looks at that and does their own sum of the parts analysis, I think they're going to find an implied value, which is certainly above where we're trading today.

Yes, that makes sense. And just for both Lisa and Brian, what are you seeing in terms of the advertising business and business activity from the local and national ad markets and where we are in the recovery? You touched on some categories we talked about those, and have you maintained that momentum into this year?

Yes. Well, we saw a lot of growth pretty consistently through all 4 quarters of last year. By the fourth quarter of last year, we were able to get back to Q4 of 2019 levels, so pre-pandemic. And that momentum has continued into first quarter. We had forecast to low single-digit growth in Q1 and still feel pretty good about that guide. I think auto is probably the 1 category. We've been talking about the top 8 or 9 of our categories, that's the only one that's declining. So we see so many of our core categories with a lot of momentum and strength. Certainly, the supply chain issues are well-documented and has had a dramatic impact on the automotive business. And talking to auto dealers, they feel like there should be a beginning of some momentum in the back half of the year, but I think it's really going to be 2023 before we see more of a recovery in that category. But at the same time, sports betting has been a blessing to us over the last years. That's begun being legalized in many states, and we see that momentum now continuing into this year. And so that's more than offset some of the declines in automotive. And then beyond that, retail has been very healthy. Services, our top category has seen double-digit growth quarter-after-quarter. So -- and I think services is a category that when you look at it, that really speaks to the health of our local markets. I mean you have medical, you have insurance, you have legal, you have home improvement. You have a lot of different aspects of your local economy represented there. And when you see strength there, I think it leads to the optimism that we show.

Yes. The only thing that I would add from my previous comments, certainly, we're seeing growth from our successful upfront last year. So we've laid in a nice foundation -- we're continuing, as I said, to optimize both from a DR perspective, but also looking at the buys in the scatter market. So we're seeing strength in the national -- we guided to up about 10% for the quarter and I think that's a pretty strong testament to the strength and resiliency of the international ad marketplace.

That makes sense. And from a sports betting perspective, do you think we have a top 5 category for you guys? And then just in terms of your exposure, what states have legalized that are on the come for legalization, just give people a sense of like what -- how many states you have.

Yes. Look, I think right now, it's kind of a mid-single-digit percentage of our core. When you consider 2 years ago, it was nothing. That's a pretty material number. We had some pretty significant markets and states launched last year, Arizona, Michigan, Virginia. So they laid in a great active base as they launched markets. We do see a heavy up when they launch and then they kind of scale back to a more maintenance level. It depends on the kind of market if it's an NFL city or a major city like that, I think the maintenance is a little better than maybe some of the smaller markets. But as we look to this year, Ohio has passed, we expect that to launch somewhere in time for college football and NFL. So for our company in Cincinnati and Cleveland, that will be a big state. There's a couple of other states that are just coming online now. So this will be the first year where we break out sports betting as its own category. Previously, it was within travel and leisure. It's become large enough and throws that sector of that with Q1, we'll start reporting sports betting by itself, give our investors a lot more visibility into that category.

And Lisa, we've heard companies also talk about national brand awareness as well. Have you seen anything on that side of the business for sports betting advertising?

Not, sports betting has not really just because it's a state-by-state rollout. We have not seen national. We're anticipating. I think once we're able to, it certainly will be a category that we go after.

And then are either of you seeing any advertising revenue impact from -- well, obviously, we talk to supply chain issues, but from Ukraine and any issues over there? Or is that -- I would...

Yes. The only thing I would say, and we mentioned this in our comments, the scatter market is steady, but I think buys are coming in a little later than they normally would. So where you would place buys for the next 6 weeks, you might see a buy place 2 weeks out just with supply chain, making sure that there's product on the shelves, those sorts of things. But at this point, that's really the only issues that we have.

Okay. That makes sense. And Brian, investors have been more enthusiastic about local broadcasters in recent weeks. What do you see as a strength of local broadcasters in comparison to other kinds of media companies?

Well, look, I think it's our local news is really our biggest differentiator. And I think that, that's our brand, more and more research says that local news is the most trusted source of news. And I think that's our connection to the community. And I think local TV stations probably mean more to local communities than any other medium locally. And so I think that's our biggest point of differentiation that we bring communities together. We are a voice that is trusted. We're a safe place for advertisers to put their brands out. We've got decades of proven success and experience there. We have the combination of big events, the Super Bowl, the Olympics, the big sporting events, combined with the utility of news, whether it's morning or weather and severe weather and things like that. And so I think we're just an indispensable form of media that's critical to people's lives and day in and day out continue to be there. And as a result of that, it's a really valuable platform for advertisers.

Can I add something?

Yes, for sure.

I mean the local marketplace has been attempted by so many different media in the past. And the reality is television still continues to be the most important way for people to get their cash registered to [ rig ], right? The local main street economy runs on television advertising. And so you don't see consumers reminiscing about their favorite search word. Nobody is thinking about their most recognizable Facebook targeted ad, what they recall is the brand power of local television and television in general. And that's -- I think that's been part of the strength of television in perpetuity, and we don't see anything really coming even close.

Well, I think this year, you think about the importance that local broadcast to play and the democracy and the advancement of democracy in America and the #1 platform for local candidates and the ultimate test of call to action, right? They have 1 day to be elected. And yet people spend a lot of time advertising and consuming the ads because we play such an important part in the advancement of democracy in America.

Yes. And you've talked about local news. Have you guys added any hours of local news, some other of your competitors have basically taking some syndication dollars and reinvest it into more news hours because that's been a pretty good ROI.

Selectively, in some places. Over the last couple of years, we've looked to add news, especially in smaller markets. We had a pretty good news footprint in some of our larger markets. We've been able to advance some technology that's really allowed us to target parts of communities that used to not have their own news. So in Billings to Bozeman, we actually are now able to create a newscast just for Billings and a newscast just for Bozeman, 1.5 hours part. Same thing in Waco, College Station is a couple of hours apart, a news in Waco from Waco is completely irrelevant in a place like College Station. And we've been able to create unique micro-targeted newscasts that serve local communities and therefore, solicit local ad dollars. And so I think we've been really focused on trying to better serve our communities by enhancing news and localized news using new technology platforms.

That makes sense. And Brian, you've been the most bullish of your peer group, I think on -- our expectations for political advertising in 2022, even though its midterm election. And so what makes you so confident about having a strong year in that in political ad revenue? And will local broadcasters lose any share to digital due...

Yes. Look, we have spoken for more than a decade about the unique infrastructure that we built inside of our company to do political advertising different than enterprise. Most of our peers continue to run all their political advertising through the national rep firms. More than a decade ago, we built our own office in Washington. We took control of all of our political. And so we have an expertise that nobody else does. And over a decade, we have relationships that nobody else does. And so we feel like we really know this space at a high level. We're very confident that more than 50% of all the dollars raised will go into local. I think local gets laid in first. And then digital, if we had more inventory, if we had more time, we'd be able to take more, but we're not like newspaper, we can't add a page. And so there's only so much we can consume. But I think you look at now the fundraising that's going on, it's at unprecedented levels. We absolutely believe that not only -- you mentioned it's not a presidential, but not only at the Senate and the Gubernatorial, but the down-ballot and even the issues, there will be more money in the ecosystem than there's ever been in the mid-term. That said, it comes down to, are you at in the places where the races are competitive? And as we look across our footprint, 7 of the highly -- most highly competitive races in the Senate will be in our markets and some of our biggest states, Nevada, Ohio, Florida, Wisconsin, and then the same thing on the gubernatorial side, some of the most heavily financed races, the most competitive races will be in 7 of our states. And again, these are mostly states where we have 2, 3, 4 stations. In Florida, we have 5 markets. We have multiple stations in Phoenix, multiple stations in Detroit in markets that will be heavily spent. We're really well positioned. So we believe our footprint really allows us to boldly say that we think our advertising on the local side this year will surpass the 2020 presidential cycle.

I was going to ask that. Okay and again -- we talked about sports betting a little bit and well over half of the 50 states have passed laws and legalize it and others in the process of doing so. How would you size the growth prospects in sports betting advertising and then we talked a little bit about it earlier, but top 5 category, [ Midroll ] category, how many tens of millions of dollars?

Yes, look at, as I think about where we're at in the cycle, if you think in terms of thirds, I still think we're in that first third. Okay in my mind, the first third is, states ratifying it. And so we've seen what 30, 31 states so far ratifies. So we've got still a good bit of the country that needs to legalize sports betting. I think once that happens, that kind of completes the first part. I think the next part is not every state looks the same and the rules for online gambling are going to look very different. I think there'll have to be a standardization that happens that brings all states into unity. And then I think the third is once that happens then I think we're able to move to an opportunity for in-game sports betting. And I think as we look at Europe and other places, the majority of dollars spent in sports betting happen in game. And so I think -- you think about ATSC and the platform and the ability for people to transact through television, the live nature of an over-the-air broadcast anything through a cable company, MVPD, where virtual service is on delay. But I think all of that will get flushed out in the next couple of years as it becomes standardization of sports betting laws across the country. And then once you get into in-game sports betting, I think that's where there'll be more money spent on that than anything else. So I still see us in the first 1/3 of what will probably be, I don't know, 5, 6, 7-year process.

That makes sense. And you mentioned it before, but there's the initial spend when it's legalized in a certain state. And you mentioned that gets dialed back a little bit. Have you sized like at all how much it sort of dropped off?

It changes market-to-market. And so I think in some markets, we've seen a scale back 15% or 20%. Other markets we have seen it scale back 40% to 50%. The good news is the money that's being pulled back is going into help launch other states, right? And so it's not leaving the ecosystem. It's just moving around to help establish new business models in different markets.

That makes sense. And Brian, investors tend to worry about cord cutting with local broadcasters. What are cable household declines looking like for Scripps right now? And how should investors think about Scripps exposure?

Yes, I think we continue to see improvement. I mean, I think at the beginning of the pandemic brought a lot of volatility to the space, but it also really helped expedite the launch of the virtual MVPDs. We see a lot of growth, double-digit growth on the virtual. We see the decline of the traditional MVPD slowing to a low to mid-single-digit number more push towards low. In our last quarter that we reported, our overall subs had declined 0.5% over the prior quarter, so less than 1%. And on a trailing 12-month, we had declined about a little over 4%. The 12 months prior to that have been 6%. So we absolutely see a slowing and things settling in at sort of a new base.

And are you guys on all the MVPDs?

Yes, yes. The other thing I think investors have to realize is our company is different than our peers, in that we actually also have the benefit of the over-the-air opportunity, right. So as somebody cuts the cord, they're plugging in a digital antenna and that's fueling the growth of our national business and frankly, our local business as well. So we don't like to see cord cutting. We do think that we've reached that level of equilibrium, but at the same time, we don't have the same exposure our peers do with respect to retrans, because we've got the growth that we see on the national side offsetting some of that. I would say that's one of the hallmarks of the company is the ability for us to recognize that there's an opportunity to profit from the disruption, and that's what we intend to do, both in the over-the-air space as well as in the connected TV space.

Makes sense. And it reminds me, Lisa, have you seen new advertisers come into the fold for free-to-air as it scaled more and more over the last handful of years?

Yes, on both the general market side as well as DR healthcare in the fourth quarter -- the Medicare enrollment period I mean, we have seen tremendous growth over the last 5 years. And because we have over-the-air networks now over-the-air networks, we tend to take more than our fair share of those advertising dollars. But CPG, pharmaceuticals, technology, services, those are the largest categories certainly that we're seeing. And some -- certainly, last year, new to our networks, the first time they bought ION and they're buying a portfolio. We have an African American focused network bounce, and we're seeing lots of really demand for that inventory as well.

The linear space has suffered some declines. And everybody sort of focuses on that, but I think you have to differentiate what marketplace is declining. So if you look at our portfolio of networks compared to the other top 9 portfolios, every one of the other networks has experienced declines in ratings. And therefore, with the exception of what they can hold on to with respect to CPM growth, they're going to see some declines there. Our networks were up by every measure as a portfolio. So where the advertisers go it follows where the eyes are and they're clearly looking to reach cord cutters and cord cutters are plugging in digital antennas and leveraging free television. And so the advertisers are moving in that direction as well.

That makes sense. And this one is for Adam or Brian, what are your thoughts on the upcoming NFL contract changes? How is it affecting your business model in terms of network comp and retrans? And how are viewership trends for the NFL this year and I think I know -- this past year, they were pretty positive.

Why don't you start and I'll sort of start as well.

Yes, I think we're thrilled with the new NFL agreements by all the networks. I mean there have been so much noise in the ecosystem about was this a year that broadcast is going to wind -- or NFL is going to wind up on OTT platforms and all that. And at the end of the day, the deals that got struck were, first and foremost, being live over-the-air network distribution. Being the second largest owner of ABC stations in the country, we're thrilled to see ABC get a bigger piece of the regular season and get into the NFL or into the Super Bowl rotation. So actually, I think we're really pleased with the outcome.

And sort of underlying what Brian said, the NFL was really, really smart in the way they recognize that they could have their cake and eat it to, right. So they are clearly distributing games into CTV platforms Paramount and Peacock and Amazon. And so a lot of investors have thought, well, that's a negative for us. In reality, I'm thrilled, right because if you think about it from a consumer's point of view. If you're a consumer that's a cord never or a cord cutter and you want your football, you're going to have 2 choices to get football. The first choice is going to be to sign up for up to 3 or 4 different pay services, pay a monthly fee and then try to figure out where each game is on which day and when or you can plug in a digital antenna. And once you plug in a digital antenna, you can get all the NFL you want for free over the air in HD in exactly the same way you've always had it. So this move from cable to broadcast and CTV will really disproportionately benefit our company because we'll pick up the value on the local side, particularly as an ABC affiliate, and we expect this to be a catalyst for the growth of over the year, and we'll benefit from the growth of over the year also on the network side.

That makes sense. And your peers have talked about also just slowing or decelerating reverse comp growth. I mean, are you guys seeing that as well in your negotiations and conversations?

Yes, I think for a lot of years, probably the most significant value driver of our relationship with the networks was our exclusivity. And with the launch of Peacock and Disney+ and CBS All Access, they're taking much of the program that we've paid for exclusivity. And a couple of hours later, it's available on those platforms. They're streaming the NFL and the Olympics and all these things on these platforms. And so we have a lot less product that we're getting from the network that's exclusive, and that is resulting in a new value exchange conversation with the network that -- the reality is they're just not worth as much to us as they used to. They're still really important. It's still the foundation of our business. I still expect a long network affiliate partnership but they are monetizing our investment in their content in another place. And as a result, that, we don't think it's as valuable to us as it used to be.

Yes, that makes sense. And Brian, you and a few peers have taken interest in e-gaming companies and you just made a $10 million investment in esports company Misfits Gaming. What opportunity do you see there? How will Scripps monetize that partnership?

Yes, we're really excited about getting to spend more time inside of the esports space. Misfits Gaming is a -- it's a company based here in Boca Raton. They own professional teams in 3 of the big esports leagues, the Overwatch League, they're called Duty League and the League of Legends, which are the 3 biggest leagues inside of e-gaming. But I think if you look at the history of Scripps, we are always looking several years out and trying to identify where people spending time and where advertisers are going to be spending money. And the Gen Zs are spending a ton of time in esports. And that's not an audience. We have a deep relationship with yes. So our ability to understand their thinking, their time, what they value is really interesting. And so and of course, there's a lot of money being transacted in that space as well. So while the first view of Misfits would be that they're an esports company, what they really are, is a content and a revenue company, and Scripps is a content and a revenue company. And so they own a couple of brands in Florida through those leagues. We own 5 markets inside of Florida. And so we saw an opportunity to work with them on creating some content around their teams and around these esports leagues that would be really appealing to a Gen Z. We have platforms to distribute that. We have thousands of advertiser relationships in Florida and around the country, tens of thousands that many of those clients are seeking to have a relationship with Gen Zs. So I think we're already learning a lot. We're going to be leaning in a lot more, but we think our investment in that makes them better. We have a platform for them to be able to increase their distribution and their brand recognition. And by the same token, allows us together with them, tap into a new audience and monetize that audience.

Make sense. And do you see other opportunities out there like Misfits that you guys could take advantage of down the road or?

Yes, I think we'll continue to evaluate the space. I mean we continue to look out and identify new platforms. I think our investment in the Katz Networks 2014, '15, something like that was similar to this, it was a modest investment into a company to learn about the multicast space and to understand what the launch of these multicast networks were ultimately, we saw great margins, a well-run business. We understood the foundation of how that business was built. We ultimately decided to acquire that company. And as a result of our acquisition of that company, it made sense that there was no better owner of ION in the industry than us where we could monetize it and create synergies as a result better. So I'm not saying that down the road, esports becomes that for us. But I think we have -- a proven history of modest investment to learn a space to understand what the future of that space is.

Okay, that makes some sense. And switching gears Jason, Scripps leverage is pretty -- historical highs right now. And what are your priorities around that? And can you remind us of your capital return policies? And where do you see leverage going in the near future?

Yes, we certainly did lever up for the ION deal because it was so transformational for us. But we have been very adamant since then that our #1 capital allocation priority is paying down debt. And we've made some good progress. We paid down $600 million in debt or nearly $600 million last year. We're going to make some significant debt paydowns this year as well. You mentioned leverage. Leverage sat at 4.7x at the end of 2021, which while well above our historical average, is significantly better than what we actually modeled when we acquired ION. Frankly, the over-performance we saw both in local, but also a tremendous first year of operations in the networks business allowed us to be ahead of schedule, enough so that looking ahead to what we think is really good 2022. We have a glide path to getting to about 4x by the end of this year and into the 3s next year, which is getting back really to where we've historically been.

And once you get back to that level and you have the strong free cash flow profile, what are some of the M&A opportunities and interest for you guys as you look ahead? Obviously, you're big in free-to-air, but are there other areas that might be interesting?

Yes, I think we'll continue to look for opportunities to put capital to work through M&A, both investing in the local media space. If there are opportunities for us to pick up second stations for us to expand into new markets where we have a little bit of a cap space, we would do that, looking for accretive opportunities. I think we would do the same on the national network side with respect to our strategy of being a leader in free ad-supported television, both in the connected TV space as well as free-to-air. The connected television space is a space that's growing very, very quickly and an area of opportunity for our company, especially given the fact that we compare us to some of our peers on the local broadcast side. We have these 9 networks where we control and all, of the inventory where we have the rights to all of the programming and our ability to move that on to new platforms is one of the things we see as a catalyst for continued revenue growth. So connected TV, whether it be through the platform and through select content categories could be very interesting. But we'll get there after we focus on paying down debt.

Makes sense. And then anyone feel free to take this, but this probably segue to my last question. But where are we in terms of industry consolidation, where do you see it going over the next 5-plus years? And will other broadcasters looking maybe go private, like take notice?

I think we're a fairly consolidated industry. The fundamentals of the business are very, very strong. No telling whether other companies will go private. But this company will continue to look for ways to evolve and create value through both near-term performance and long-term value creation in the media landscape, especially as we think about the future of television.

And we've heard a lot about ATSC 3.0 and where that's going. The past 5 years has been a lot of talk, and now it sounds like there's a roadmap into the 2030s, where we might actually start to see in the mid-2020s some real monetization started to happen, minimal first, but then growing. Can you talk about where you see real dollars coming in and what do you think the opportunity is over time? And I think Nexstar has said that they are pretty confident that it could be as big as the retrans revenue, so interesting.

Yes, so we're the largest holder of broadcast spectrum. We obviously today focus on our local and networks business. That makes us the most efficient monetizer of broadcast spectrum in the country, but we're always focused on identifying the best and highest use for that spectrum. And so we're working across the industry with both some of our peers as well as some infrastructure companies to identify ways that our spectrum can be -- used for new business models. Whether it's with the automakers and with the rise of autonomous vehicles and Internet of Things with respect to data casting to smart cities, so there's going to be opportunity. I think that's what [ Perry ] is referencing, a BIA study that said they'll be between $6 billion and $15 billion in revenue generated through the use of spectrum, and we fully expect to participate in that, especially as the largest holder of broadcast spectrum. I think we're really well positioned and putting the resources in today to ensure that we're not just an affiliate, but actually one of the companies at the forefront creating the value through -- new business creation on spectrum.

And will you guys -- do you guys do a test with like a connected car with partnership with Nexstar? And can you just talk about your partnership with them and how you cover 92% of the country with your spectrum?

Sure. So today, Scripps and Nexstar have unduplicated reach of 92% of the U.S. We did a test in Michigan for what I would characterize as sort of the cellularization of broadcast spectrum, the idea that you could drive from one end of Michigan to the next. We did that with some auto manufacturers as well as some infrastructure companies like Crown Castle to really determine whether the technology could. And it did prove out that you could seamlessly move across the state without losing signal and test the thesis both around in-car entertainment as well as data casting. And so that was the first step to identifying those new business opportunities, recognizing that this is a robust platform that we'll be able to use to blanket the country with data casting, should that be the direction we want to move with our spectrum.

Makes sense. I know we're out of time, but if anyone have a quick question or -- okay. I think we're good. Well, thanks a lot.

Thank you very much. Thank you for joining us.