E W Scripps Q3 2026 Earnings Call Transcript

E W Scripps (NASDAQ:SSP) reported third-quarter financial results on Friday. The transcript from the company’s third-quarter earnings call has been provided below.

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View the webcast at https://edge.media-server.com/mmc/p/32s8jqy4/

Summary

E W Scripps Company reported third-quarter local media division revenue of $373 million, up 19% year-over-year, driven by political advertising revenue reaching $81 million.

The company is executing an EBITDA Improvement Plan aiming to generate $125-$150 million in savings or revenue growth, with $100 million in run-rate savings expected by year-end.

Scripps Networks revenue declined 11% to $173 million in Q3, affected by low consumer confidence and changes in Nielsen’s ratings methodology.

The company plans to pay down at least $150 million in debt during Q4, with net debt standing at $2.2 billion and net leverage at 5.2 times.

Management highlighted successful political ad revenue and sports strategy as key drivers for future growth, alongside a focus on local news and streaming platforms.

E W Scripps completed workforce reductions impacting 20% of employees, aligning with a broader transformation strategy to enhance operational efficiency.

Future guidance includes local media division revenue growth in the low- to mid-40% range for Q4, with core advertising down due to political ad crowd-out.

Management plans to continue leveraging sports inventory and streaming platforms, with an emphasis on local news distribution across multiple channels.

Full Transcript

OPERATOR

Good day, and thank you for standing by. Welcome to the third quarter 2026 E W Scripps Company earnings conference call. At this time, all participants are in a listen-only mode. After the speaker’s presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press.

Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your first speaker today, Carolyn Michelle, Head of Investor Relations. Please go ahead.

Carolyn Michelle (Head of Investor Relations)

Thanks, Edie. Good morning, everyone, and thank you for joining us for a discussion of the E W Scripps Company’s financial results and business strategies. You can visit scripps.com for more information and a replay of this call. A reminder that our conference call and webcast include forward-looking statements based on management’s current outlook, and actual results may differ materially. Factors that may cause them to differ are outlined in our SEC filings. We do not intend to update any forward-looking statements we make today.

Included on this call will be a discussion of certain non-GAAP financial measures that are provided as supplements to assist management and the public in their analysis and valuation of the company. These metrics are not formulated in accordance with GAAP and are not meant to replace GAAP financial measures and may differ from other companies’ uses or formulations. Reconciliations of these measures are included in our earnings release. We’ll hear this morning first from Scripps Chief Financial Officer Jason Combs and then President and CEO Adam Symson. Here’s Jason.

Jason Combs (Chief Financial Officer)

Good morning, everyone, and thank you for joining us. We are now three days past the midterm election, and I’m pleased to report that we ended the cycle above even our guidance from last week and 44% above our record 2022 midterm political revenue level at $284 million. Cash from this year’s political ad revenue will go toward paying down debt. In addition, we continue to make progress on our EBITDA Improvement Plan. As you know, our company transformation plan includes both expense reductions and revenue growth initiatives.

We expect to generate between $125 and $150 million in benefit to the bottom line. We’re on track, as discussed last quarter, to deliver $100 million of that in run-rate savings by year-end. We’ve completed workforce reductions this year impacting about 20% of our employees. And just a reminder that while the majority of this impact will show up next year, you’ll begin seeing the transformation run-rate savings in the fourth quarter, as reflected in the guidance I’ll give you this morning.

Now, let’s talk about the quarterly results. I will present our third quarter local media division results on a same-station or adjusted combined basis, removing the third quarter 2025 results of the two TV stations we’ve now sold and reflecting the addition of our Lexington ABC affiliate. During the third quarter, our local media division revenue was $373 million, up 19% from the third quarter of 2025. Core advertising revenue decreased 13%, reflecting displacement from our large amount of political advertising revenue.

Local media political advertising revenue was $81 million, a record midterm third quarter for us. Local media distribution revenue was flat from the prior-year period at $178 million. Expenses for the division were down 3% year over year, driven by lower network affiliation fees and lower employee costs. Local media segment profit was $118 million compared to $50 million in the year-ago quarter. For the fourth quarter, on an adjusted combined or same-station basis, we expect local media division revenue to be up in the low- to mid-40% range. We expect core advertising to be down high single digits, driven primarily by crowd-out from record midterm election revenue. And again, we can now say our full-year local media political advertising revenue came in Tuesday at $284 million. That is 44% above the 2022 midterm when we took in $198 million.

Adam will give more color on this in a moment. We expect fourth quarter local media distribution revenue to be up about 4%, driven by our recent contract renewals. We expect fourth quarter local media expenses to be about flat to the 2025 quarter. Excluding new costs tied to Pistons and Predators contracts, Q4 expenses would be down mid- to high single digits. Now let’s review the Scripps Networks division third quarter results and fourth quarter guidance. Once again, I’ll be presenting the results on an adjusted combined basis, in this case adjusting for the impact of the Court TV sale in February. In the third quarter, Scripps Networks revenue was $173 million, down 11% from the prior-year quarter. Our results include the benefit of Nielsen’s September 1st ratings methodology changes as well as continued growth in Networks connected TV revenue, up 37% for the quarter, but we also experienced pressure from low consumer confidence in the economy, especially in the direct response market.

The division’s third quarter expenses were up 0.9% year over year at $140 million, but if you factor out the first-year impact of our new WNBA contract, Networks expenses would be down year over year. For the fourth quarter, we expect to report the division’s expenses that are down and will continue to trend down next year as transformation cost-savings initiatives take effect. Scripps Networks Q3 segment profit was $33 million. For the fourth quarter, we expect Scripps Networks division revenue to be down in the high single-digit percent range, mainly because of the soft direct response advertising market.

For the full year, we expect Networks connected TV revenue to be at least $155 million, 36% above 2025. We expect Scripps Networks Q4 expenses to be down in the low single digits. For the segment labeled Other, in the third quarter we reported a loss of $6.4 million. Shared services and corporate expenses were $25.9 million. For the fourth quarter, we expect that to be about $27 million. For the third quarter, the company is reporting income attributable to Scripps shareholders of $21 million, or $0.21 per share. The current-year quarter included $18.8 million in restructuring costs, which decreased the income attributable to shareholders by $0.14 per share.

In the prior-year quarter, loss attributable to shareholders of Scripps was $49 million, or $0.55 per share. In addition, the preferred stock dividend has a negative impact on earnings per share even when we don’t pay it. This quarter it reduced EPS by $0.17. We ended the third quarter with $83.4 million in cash and nothing drawn on a revolving credit facility. Net debt was $2.2 billion. As defined in our credit agreement, we expect to pay down at least $150 million in debt during the fourth quarter.

Net leverage at the end of the quarter was 5.2 times according to the terms of our credit agreement, which includes certain pro forma adjustments related to our transformation efforts. And now here’s Adam.

Adam Symson (President and CEO)

Thanks, Jason, and good morning, everybody. We’re very pleased to be reporting another election year where E W Scripps has set a record for midterm advertising revenue, finishing 44% above our last midterm cycle. And as Jason said, these high-margin dollars will go directly to reducing our quantum of debt. AdImpact tells us broadcasters are receiving more than half of all TV political ad spending. And this cycle, that half is even more significant, because national political spending levels were a record not just for midterms, but measured against presidential years as well.

We’re not surprised. Broadcast television is a trustworthy, reliable platform for candidates and campaigns to reach prospective voters. That’s been true for decades, and it remains true today. And increasingly it is true on our local and national streaming platforms as well. We expect that relationship with political advertisers to endure and deepen as we grow our streaming reach. Our performance came down to two factors. First, of course, is our footprint, which once again lined up exceptionally well with some of the most hotly contested races. You won’t be surprised to hear that we saw strong spending in Ohio and Michigan, both of which were red states in 2024, but came back squarely into the toss-up column for this cycle, driving tremendous national party dollars there. We also saw strong results across Arizona, Florida, Tennessee, Wisconsin, and Virginia.

While our footprint ensured the revenue opportunity was in our markets, our sales strategy and execution are what really allowed us to take full advantage of this year’s significant demand and outpace our past record performance. And one differentiator that is instructive for how you should model this company going forward is the way our political revenue yield was boosted by the Scripps Sports strategy. In many of our most competitive political markets, our sports inventory added meaningful value.

For example, in Detroit, we leveraged the opening games of the Pistons season to create inventory that we monetized at premium political rates. This is the sports strategy working exactly as designed: new high-value local inventory that serves multiple categories of demand simultaneously — sports advertisers, political campaigns, and local retail. And as we look ahead to 2028, we intend to build even more of that inventory in more of our markets.

Last week was difficult across E W Scripps. We notified 431 employees that their roles were being eliminated, bringing the total employees impacted in 2026 to approximately 850, nearly 20% of our employee count from the beginning of the year. I want to speak directly about this because 2026 has seen one of the most significant structural resets in this company’s history, and it hasn’t been easy. The people of Scripps who are navigating this transformation while simultaneously managing a frenetic record political cycle, new distribution agreements, new sports rights launches, and measurement disruption at our networks — they deserve enormous credit. But here’s what I want investors to truly understand. This transformation is not just the cost-reduction story. It’s the story about what we are building in place of the old model to drive growth, with a setup for greater economic durability.

Our local stations are changing along with the American consumer. To do this, we had to upend more than 50 years of legacy newsroom workflow. Now we’re putting more journalists in the field to report more stories throughout the day for distribution across the broadcast, streaming, digital, and social platforms where consumers are spending the most time. We’re responsibly taking advantage of new technology, including AI, automation, and centralization, to care for some of the traditionally more labor-intensive elements of television news production and put more journalists out in the community, developing relationships, gathering information, and reporting the news. Local news is the most important product for this company, both in terms of our mission and in terms of our financial viability. We’re making decisions in service to our intent to thrive and fulfill our commitments to our country and to our shareholders.

We are transforming into a faster, more agile, and more deeply local company — one that can sustain the public-interest work that has defined Scripps since 1878. The early results on streaming platforms are encouraging. Across stations, our new workflows are producing a truly local 24-hour stream, and we’re seeing hours of viewing jump an average of 23% before we’ve even begun to market the product. Four of our first stations to launch are averaging nearly 70% growth in hours of viewing after just eight weeks. And it’s not at the expense of our linear TV performance. Traditional time period ratings have remained stable.

It’s very early and the growth is off of a small base, but I’m encouraged by the consumer demand for local news. I expect that growth to turn into revenue and bottom-line value as we mature the initiative, and that’s the point. There is opportunity ahead to serve new audiences on new platforms, and it has taken a bold commitment to change the way we do our work. Our local media streaming strategy draws directly from what has worked at Scripps Networks. We recognized early the value of streaming rights for our networks’ content. Shortly after forming the Networks division, we gathered the rights to run programming across streaming services, formed agreements with CTV distributors, and built what is now our ubiquitous reach on that platform. That work has taken our Networks’ CTV revenue from zero to a projected $155 million for the full year 2026.

That will be 36% above 2025. The scale and revenue potential of what we are building here is real, and it’s accelerating because our focus is on the consumer. Let me now address our Scripps Networks’ financial performance brought on by the challenges we saw earlier this year, created by an inaccurate reflection of our viewership. Nielsen’s sudden change to methodology last winter altered our measured audience supply overnight. We worked with Nielsen to address it, and I’m pleased to tell you that work is now bearing out in the numbers. As we wound down the third quarter, we began seeing the results, and the data demonstrates what we always knew: our audiences didn’t go anywhere.

The measurement framework introduced September 1st is now a much better reflection of our true ratings. The biggest driver for us in Nielsen’s update is its larger antenna household universe. Antenna homes make up a sizable portion of our core audience, and getting that count right gave our networks a meaningful and deserved ratings lift. At ION, viewership among the key demographic of adults 25 to 54 grew 7% in September over the two months before the change, and all Scripps Networks viewing in that demo grew an average of 23%.

That performance has been sustained into October, is now built into our forward-looking statements, and is a tailwind as we head into 2027. During the third quarter, the Scripps Networks closed out a successful upfront, buoyed by our Scripps Sports strategy that’s made ION the home of women’s sports. The team sold out more than 75% of our sports inventory, propelling Scripps to buck the industry trends and beat peer performance. Our networks team went into this year’s upfront season with one of the most compelling sales stories in the industry, and they delivered. The linchpin of that story is women’s sports on ION and our networks’ unparalleled reach on every television platform.

ION’s sports inventory is commanding advertising rates that are more than two times its non-sports inventory, and we saw many new clients transition from scatter to the upfront, concerned that our sports inventory would either sell out or command even more premium prices. In scatter, we saw particularly high demand across the WNBA and the NWSL. We successfully sold key sponsor partnerships across many of our major opportunities, but we also strategically preserved several high-value assets and opportunities for the scatter marketplace that represents meaningful upside in our pipeline as we move into 2027.

One last note before I close out Networks. Although we have faced secular challenges throughout 2026, what I will tell you is that Scripps is focused on the levers within our control, particularly as we shift to higher-yield sports and CTV inventory, which provides us meaningful insulation from external factors. Let me close my remarks with the frame I want investors to carry into 2027. E W Scripps’s transformation is necessary, as are the hard decisions we made in 2026. Investors will see this work begin to flow through operating results in the fourth quarter and into next year. The EBITDA improvement plan was designed to enhance margins across the enterprise, improve the balance sheet, and support durability. But it’s very important for you to understand that cost-cutting was never the destination.

While we expect to continue the repositioning of the company as we move into 2027, the teams at Scripps now turn more of our attention to growth. We’re advancing dozens of initiatives to grow revenue with bottom-line benefit, yielding more dollars from businesses we run today, as we do with Scripps Sports, and pursuing adjacent opportunities that double down on our focus of creating connection in our local markets. And doing all of this is in service to building a solid foundation from which we can execute future M&A and transformation at this company.

Ultimately, we are guided in this work by our vision of creating connection within our audiences and communities. The journalists we are investing in, the reporters we are adding back to the field, the community relationships we are deepening — those build brand equity that make every other revenue line possible. This will benefit us in 2027 and be the setup for what I expect will be an outstanding 2028. We’re ready for what comes next, and I look forward to showing you, quarter by quarter, exactly what that looks like in our results.

Dede, we are now ready for questions.

OPERATOR

Thank you. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw, please press star 11 again. Please stand by while we compile the Q&A roster. And our first question comes from Dan Kernos of Stonex. Your line is open.

Dan Kernos (Analyst at Stonex)

Great, thanks. Good morning, Adam, Jason. Really appreciate all the incremental color. Just one housekeeping, Jason, because I think I just missed it. Did you say distribution up 4% in Q4?

Jason Combs (Chief Financial Officer)

That is correct, yes.

Dan Kernos (Analyst at Stonex)

Okay, got it. Thanks. Adam, I just want to kind of go off of the commentary that you provided. You know, I know we always ask you sort of for more color on the growth initiatives, and I know you’re not going to give us the exact playbook. Clearly appreciate what you’ve done with sort of the push into sports, all the benefits that you’re seeing there, and the tailwinds that you’re seeing from that. You talked about some adjacent opportunities. Is there any other kind of directional color, areas that you could give us on sort of things that you think are either low-hanging fruit or attackable from a growth perspective as we head into ’27?

Adam Symson (President and CEO)

Well, I think there’s actually meaningful growth to be found inside the core business, both through some optimization of yield management and the way we approach sales execution in networks and local. From an adjacency perspective, I think there’s a lot of opportunity for us to extend the value of the IP that we both own and that we partner with, including in the sports ecosystem, to create additional revenue in the local markets as well as in the networks. And beyond that, there’s the work we’re doing with Edgebeam and the value of our spectrum, along with some other I think really interesting ways we think we can create value through the use of our inventory that are a little nontraditional.

And I’m sure as we move through 2027 and begin to see those materially impact results, we’ll share more.

Dan Kernos (Analyst at Stonex)

Got it. That’s really helpful color. And then maybe just one for Jason. Look, obviously you guys executed super well. Everyone’s flush with political money, came in big. We all kind of think that this is the new normal now. So unfortunate for those of us trying to watch football on Sunday, but that’s the way of the world. Great for all you guys. So, as you think about the balance sheet going into next year, Jason, you’ve done a great job kind of managing the maturities here. We have to think about, you know, the press and all the rest of that stuff. You’re in a pretty decent spot now given the end of the year and some of these initiatives that you’ve got going on. So just help us think through maybe your high-level thoughts going into next year from a balance sheet perspective.

Jason Combs (Chief Financial Officer)

Yeah, so first I would say, given the guidance we gave on political and the expectations for the fourth quarter, I think from a leverage perspective you’ll see leverage move down sequentially from Q3 to Q4, and we’ll have a pretty material amount of cash that we’ll be able to direct towards debt paydown at the end of the year. You kind of referenced there sort of maturity risk and, you know, from our perspective we’re most focused on the near-term maturity risk.

And so I would expect us to direct the cash flow we have through the remainder of the year towards our B2 term loan, which is our nearest-term maturity that comes due in 2028, and I think that will be the case as we move into the beginning of next year as well. The other question we do get asked a lot is whether we would consider buying back bonds, particularly our 2031s that are trading at a discount in the open market. As I mentioned, right now we believe the highest and best use is to focus on those near-term maturities. We have sort of earned our way into having a bucket available that we could apply to the bonds, and I think as we move through next year we’ll continue to weigh our options, consider whether a bond repurchase later next year makes sense, and kind of just look across the cap structure at our, I would say, broader deleveraging priorities.

Dan Kernos (Analyst at Stonex)

Awesome. Thank you both very much. Appreciate it.

Jason Combs (Chief Financial Officer)

Thanks, Dan.

OPERATOR

Thank you. And our next question comes from Craig Huber of Huber Research Partners. Your line is open.

Craig Huber (Analyst at Huber Research Partners)

Great, thank you. Good morning, guys. A few questions. I’ll just go one by one, make it easy for everyone. Talk a little bit further, if you would, please, in Scripps Networks about the ad revenue trends. I’m curious for DR — what is DR right now, I guess last quarter, as a percent of ad revenue within Scripps Networks? How’s that tracking? If you can get a little more granular on that, I appreciate that. Some follow-ups. Thank you.

Jason Combs (Chief Financial Officer)

Yeah. So we don’t disclose a specific breakdown between DR and general market, but what I can tell you is when you look at the performance in Q3, the Q3 performance was largely driven off of the Nielsen change and impacts to general market, which, as Adam said in his prepared remarks, we did see some improvements upon the change on September 1st, but the beginning part of the quarter certainly weighed pretty heavy on the revenue performance. From a direct response perspective, as you turn the page to Q4 and you look at the guide we gave for Q4, I would say we continue to be pleased with what we’re seeing from a ratings perspective and how that is flowing through to the general market. The guide that you’re seeing for Q4 would be more indicative of the direct response marketplace and some of the challenges we see there tied to the macro and the impacts in terms of consumer confidence and how that’s impacting the consumer pocketbook.

Craig Huber (Analyst at Huber Research Partners)

Okay, my next question on the local TV station front: Where is news right now as a percentage of ad revenues for you guys?

Jason Combs (Chief Financial Officer)

We don’t break that out either, but I would say it is by far the biggest bucket of core ad revenue.

Craig Huber (Analyst at Huber Research Partners)

Okay, and when you guys said that ratings within your local TV stations are stable, does that mean the trends are similar to what they’ve been in recent years?

Adam Symson (President and CEO)

Yeah, exactly. I think the comment was meant to certainly allay any concerns or fears that the work we’re doing to incrementally create value on new platforms like streaming, social, and digital would in some way negatively impact linear ratings. And they have not at all.

Jason Combs (Chief Financial Officer)

And maybe just, Craig, to give just a little finer point on my comment on news: While we don’t disclose a specific number, news is by far the biggest category of core revenue. Sports is growing and is sort of the second biggest. And there is a significant gap in size between the core ads revenue generated during news versus sports.

Craig Huber (Analyst at Huber Research Partners)

Okay, I appreciate that. Also wanted to ask you, the 20% layoff of employees this year sounds like that’s going to all be wrapped up very soon — by the end of the year for sure. It sounds like you have a full benefit for next year. Just talk, Adam or Jason, about taking out that amount of employees. As you mentioned, it’s very difficult and stuff. But what’s the risk here that it could potentially hurt the operations? Maybe touch on that. Obviously I’m sure you were very methodical in how you did that and stuff.

This is not just a run-of-the-mill 5% layoff in a recession — that’s a pretty big number. But do you feel there’s any risk here to upset the operations, the revenues, et cetera?

Adam Symson (President and CEO)

Thanks for the question, Craig. I mean we’re executing a really comprehensive plan to rethink the way we’re doing things. And so no, this is not a 5% annual cut in order to just trim expenses. This is in service to true transformation. We have fundamentally changed the way we are operating and servicing our audiences, and we’re doing so using technology, centralization, and some non-generative AI. I don’t see, as I described with the linear ratings, I don’t see top-line risk associated with this move. If anything, I see top-line upside because we’re beginning to see the traction of what happens when you take your content, add to it — because we’re putting more reporters in the field, covering more communities across our footprint — and distribute it in earnest onto more platforms where consumers are already going. So this is not a story about risking the core.

This is a story about transforming in order to actually create upside beyond the core and to do so with a backdrop of greater durability.

Craig Huber (Analyst at Huber Research Partners)

I appreciate that. One more question, if I could, Jason. Maybe more of a housekeeping question. Putting aside the 20% headcount layoff, can you talk about what investors should expect for your other expense category next year in each of your segments? It’s obviously very difficult to take out all those employees, but how much have you guys tackled taking out expenses in this other expense category — not the program, but the other expense line — in each segment?

How should we think about that line for next year, please?

Jason Combs (Chief Financial Officer)

Yeah. Without really guiding to 2027, what I can say is the transformation efforts that Adam has talked about encompass the entire. And so certainly when you think of both the impacts in the other expense line of having a smaller employee base — and that having implications down into things like technology licenses, all those sorts of things — but also we have a very strong focus on identifying within that other bucket where there is opportunity to drive year-over-year declines.

And so when we talk about declining expense year over year, I think that is really across the P and L, not just in the employee cost line.

Adam Symson (President and CEO)

Craig, I want to also just provide a little bit of context because I want to make sure it’s clear this is a three-year transformation strategy. We started it this year. And so while the most comprehensive employee reductions are behind us and investors will see that impact flow through in 27 and 28, there will be other initiatives that will impact headcount. So I think we have to recognize this is a continued focus on transformation while at the same time, as I mentioned in my prepared remarks, we’re turning our attention to some very specific growth initiatives that we think will enhance the yield on the business.

Craig Huber (Analyst at Huber Research Partners)

That’s all I have. Great. Thank you guys for the information.

Adam Symson (President and CEO)

Thanks, Craig.

OPERATOR

Thank you. And our next question comes from Avi Steiner of JPMorgan. Your line is open.

Avi Steiner (Analyst at JPMorgan)

Good morning. Thanks for taking the questions, and I apologize if I missed this already, but you gave distribution up 4% in the fourth quarter. I’m wondering if you can talk about core post-election, how that looks on the local side. Again, if you gave it already, I apologize. And I’ve got a couple more.

Jason Combs (Chief Financial Officer)

Yeah. Hey Avi, it’s Jason. So, in regards to maybe two things: One, in regards to your question on core, we put out a guide that is heavily influenced by the amount of political crowd-out in a record midterm for us. It’s early to talk about trends post-election. It can take a little bit of time for displaced advertisers to kind of work their way back in the system. But I would say overall we’re pleased with the way things are pacing coming out of the election.

And, you know, I think as we look at that pacing, there’s a nice bump as you move from October core up to November core — you know, 30% growth really as you get past all of that displacement. So overall I’d say we’re pleased with how core is trending, but it’s also early. The other thing that I want to mention is, because you did bring up distribution being up 4%, another question we’ve gotten some is, well, hey, we know your distribution story is for this year. What does it look like as you look towards 2027? And so from a sub-churn perspective, we’ve seen some slight improvement in sub churn recently. You see traditional MVPDs improving, you see some slowing in virtual growth, but the net is a slight improvement — still down mid-single digits, but a modestly better mid-single digit.

And when you put the combination of some churn improvement and our recent MVPD renewals, I think that has us pretty optimistic as we look forward to next year. I would expect to see kind of low- to mid-single-digit growth in gross next year and double-digit growth in net. So certainly something that would provide a lift to our P and L as we look, and a reason for optimism as we look towards 2027.

Avi Steiner (Analyst at JPMorgan)

That’s great, and you tackled another question I had, so thank you for that. I don’t want to beat this cost-saving question to death, so to speak, but when we come to the end of this year and we come to the end of next year, if we keep everything else flat, the expense base is down 100, 125. I’m just trying to figure out the size as I’m thinking about next year’s model, at least on my end — how to think about expenses.

Jason Combs (Chief Financial Officer)

Yeah, I mean, I think so. We haven’t specifically said Where we’ll be at the end of next year. We said we’d have a run rate achieved of 100 million by the end of this year. As we alluded to, the transformation target, the 125 to 150, is both some combination of cost and revenue. I think in February we’ll give more guidance, I’d say more concrete guidance in terms of what to expect from a P&L perspective. But based on that guidance, or the run rate we said we’d achieve by the end of this year, I think you would expect a pretty material year-over-year decline in most expense.

Adam Symson (President and CEO)

Well, you know, we have a terrific relationship with Roku and with Tubi, and I expect it to continue. We have actually a fairly long-term relationship with Roku. It’s probably fair to say we’re one of their most important partners given the hours of viewing we see on our networks. And we have a very good relationship more broadly with Fox given the relationship we have in the local business. So I don’t expect any headwinds in the relationship with Roku.

If anything, I actually think Roku being a part of a traditional linear media company could potentially open up additional opportunity for us because it will provide them, I think, insight into new ways to drive audience and monetize it.

Jason Combs (Chief Financial Officer)

Yeah, and so it doesn’t all have to go to the B2 term loan. I think we are directing it there because we are addressing our near-term maturity risk and trying to reduce the quantum of that debt going into 2027 by as much as we can. We have a basket of around $30 million or so that we could use to buy back bonds on the open market. And as I said, that is not the plan as we exit this quarter. But I think as you think ahead to next year, that gives us some optionality as we see how cash flow comes through next year and we make determinations on 2027 cash flow and how to apply it to debt.

OPERATOR

Thank you. And our next question comes from Steven Cahall of Wells Fargo. Your line is open.

Steven Cahall (Analyst at Wells Fargo)

Thank you. Adam, I wanted to ask you about M&A. And just to preface, I certainly understand the importance of the transformation program. I know you’ve said that you’re not counting on or relying on strategic M&A. So I don’t want to kind of underweight the focus on transformation, but we’ve talked a lot about it on the call. So with that, here’s the M&A question. You’ve got really good political numbers. The balance sheet’s in a better place, but it is still a little bit strained. I’d say for some of your peers it’s a similar story. And if we get to the end of this FCC, which is pretty favorable to broadcast, it would seem like there could be a big missed opportunity if there isn’t some strategic M&A. So I’m wondering, as you focus on the transformation program, will you be kind of redoubling efforts for industry conversations around M&A, or is that something that you’re kind of more waiting to come to you?

And then, Jason, just a housekeeping one. Thank you for the outlook on distribution. I think you had a blackout in the numbers in 2026. Is there a good way to think about organic distribution growth in ’27 and does it encapsulate the Cox–Charter merger and any impact you’ve got there? Thank you.

Adam Symson (President and CEO)

Thanks, Steven. Well, I think if you know me, you would know that I don’t sit around and wait for anything to come my way. I’m fairly proactive and we’ll continue to explore all options that we think are in the best interest of shareholders. The regulatory environment may appear to be favorable at the FCC, but Tuesday’s Blue Wave injects a little bit more uncertainty into the prospect of a mega-merger because there have that many overlaps. I think we have to see what happens with the next TEGNA deal.

I don’t know if it’s clear yet what the courts and how the state attorneys general will react. And so from my perspective, we’re just totally focused on doing what we can in order to optimize our portfolio. We’ve been really active with M&A from the outset, and every deal that we’ve announced has either put cash in our pocket or is going to increase segment profit to benefit the company and investors, and some of those deals have done both. That’s the divestitures of the stations in Fort Myers and Indianapolis, both at really premium seller’s multiples, the Gray swap, and our sale of Court TV.

And I don’t think we’re finished with that work.

Jason Combs (Chief Financial Officer)

And I can answer real quick on the distribution question. Steve, you are correct. We do have the impact of the blackout, which certainly impacts the numbers I gave. If you wanted to exclude the impact of the blackout, I think you’d see gross that would be closer to flat-ish, which wouldn’t be uncommon in a year where we’re only renewing 5% of our subs. But we would still anticipate double-digit growth in net even when you factor in the impact of the blackouts.

Steven Cahall (Analyst at Wells Fargo)

Thanks, Jason.

OPERATOR

Thank you. This concludes our question and answer session and also today’s conference call. Thank you for participating, and you may now disconnect.

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