Q4 2023 E W Scripps Co Earnings Call

Participants

Carolyn Micheli; Executive VP, Chief Communications & IR Officer; E W Scripps Co

Jason Combs; Chief Financial Officer; E W Scripps Co

Lisa Knutson; COO; E W Scripps Co

Adam Symson; President, Chief Executive Officer, Director; E W Scripps Co

Daniel Kurnos; Analyst; The Benchmark Company, LLC

Steven Cahall; Analyst; Wells Fargo Securities, LLC

Craig Huber; Analyst; Huber Research Partners, LLC

Michael Kupinski; Analyst; NOBLE Capital Markets, Inc

Presentation

Operator

Thank you for standing by, and welcome to the Scripps Fourth Quarter 2023 earnings call. At this time, all participants are in a listen-only mode. Later, we'll conduct a question and answer session. Instructions will be given at that time. If you should require assistance during the call, please press star then zero. As a reminder, this conference is being recorded. I would now like to turn the conference over to our host, Executive Vice President of Investor Relations, Carolyn Micheli. Please go ahead.

Carolyn Micheli

Thanks, Rich. 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 link to the replay of this call.
A reminder that our conference call and webcast include forward-looking statements and actual results may differ. 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 included in our earnings release or the reconciliations of non-GAAP financial measures to the GAAP measures reported in our financial statements.
We'll hear first this morning from Scripps' Chief Financial Officer, Jason Combs, then from Scripps Chief Operating Officer, Lisa Knutson, and finally from President and CEO, Adam Symson. Here's Jason.

Jason Combs

Thanks, Sheryl, and good morning, everyone, and thank you for joining us.
Let's start today with a look at our strong finish to 2023. I want to review a few fourth quarter and year-end highlights, then I'll give guidance for the first quarter and several full year items. And I'll conclude with capital allocation and our debt picture. We were very pleased in 2023 by significantly exceeding our free cash flow expectations on our last earnings call in November, we set a range of $50 million to $60 million in full year free cash flow, and we ended at about $77 million. The overperformance was driven by our highest political advertising revenue for an off-cycle election year as well as stronger than expected ad revenue results in Scripps Networks also in 2023, we achieved $752 million in distribution revenue as we renewed 75% of our Pay TV households. That was up 15% over 2022, and those results drove net distributions of more than 40%. We are pleased we were able to successfully avoid any blackouts with the cable and satellite providers throughout all of those negotiations.
For the fourth quarter of 2023, we reported financial results that nearly all met or exceeded the expectations we set in November. We executed tight expense management and our Scripps Networks revenue came in better than expected at down only 7% driving network segment profit performance. Scripps Networks revenue for the fourth quarter was $230 million exceeding our guidance because of better than expected revenue from all three key areas, general market, connected TV and direct response, Scripps Networks. Q4 segment expenses were $166 million, down 1.2% from the prior year quarter. Segment profit in Networks was $64 million. In our Local Media division, total revenue was down 12% from the prior year quarter due to the absence of election year political advertising political ad revenue in Q4 2023 did exceed our expectations at $60 million, driven by spending in Montana and Ohio. Total political ad revenue for 2023 was $33 million, as I mentioned before, the highest for an off-cycle election. Fourth quarter local core advertising revenue was up 1% from the prior year period and local distribution revenue was up 22%, fueled by renewals of our cable and satellite agreements. Local Media expenses were up less than 5% from the prior year quarter. This increase reflects higher programming fees and the cost of sports rights agreements with two National Hockey League teams. Local Media Segment profit was nearly a $86 million in the segment labeled Other, we reported a fourth-quarter loss of $12 million. The segment includes spend on promoting our Tableau over the air viewing device shared services and corporate expenses were $24 million. Up a bit from our November guidance is better than expected. Quarterly results drove our various variable compensation higher. The loss attributable to shareholders of Scripps was $268 million or $3.17 per share. Pretax cost for the quarter included a non-cash goodwill impairment charge for Scripps Networks of $266 million. In addition, we reported $9.4 million in restructuring charges. These charges increased the loss attributable to shareholders by $3.15 per share. The restructuring costs are related to our company-wide reorganization. We are on track to realize annualized savings of more than $40 million by the middle of this year. As of quarter end, cash and cash equivalents totaled $35 million. Our net debt at quarter end was $2.9 billion. We ended the year with net leverage of 5.7 times for the calculations in our credit agreements.
And now I'd like to discuss a few key guidance items for the first quarter and full year 2024 for the first quarter. In the Scripps Networks division, we expect revenue to be flat to down low single digits. We expect first quarter network segment expenses to be down low single digits. We expect total local media revenue to be up in the low 10s percent range. We expect local core ad revenue to be flat to up low-single digits. Lisa will give more color in a moment about our strong start to the quarter with key categories, including auto. We expect Q1 local media expenses to be up about 10%. If you back out the costs associated with our new sports deals, network fee step-ups and one-time facility work. Local Media expenses would be up in the low to mid-single digits. First quarter shared services costs are expected to be about $24 million. We expect the segment labeled other to generate a loss of about $7 million in Q1 as we continue to educate consumers about free over-the-air viewing and promote our Tableau device.
Now I'd like to touch on several full year items. We expect our local political advertising revenue to come in between $210 million and $250 million in this presidential election year, we expect connected TV revenue for the networks to increase by more than 40%, excluding the impact of our low margin programmatic product that we're sunsetting. We expect our distribution revenue growth to be modest this year because we're renewing only 5% of our pay-TV households. We expect capital expenditures of $70 million to $80 million. That includes onetime costs to build out a new station facility and to reconfigure office spaces where we're consolidating our footprint to lower operating expense. We expect cash interest this year of between $200 million to $210 million, cash taxes of $50 million to $60 million, and depreciation and amortization of $150 million to $160 million. We do not have any required pension contributions this year.
I'd like to end by discussing capital allocation and debt paydown. As you know, Scripps took on significant debt in early 2021 to acquire ION Media, the strategic purchase of ION form the foundation of our Scripps Networks segment, which has helped to Scripps to diversify its revenue base and to build strong nationwide over the year. Audience reach the new segment has increased the durability and profitability for enterprise. The ION television stations in the spectrum have opened up significant growth opportunity for the Company in local and national media through script sports. Remarkably in the three years. Since acquiring that debt, Scripps has already paid down 22% significantly outpacing our peer group. We brought our total debt down by nearly $1 billion from about $4 billion to about $3 billion. That represents 98% of our discretionary capital applied toward debt reduction.
Focusing on debt paydown, we have elected to defer the payment of our preferred equity dividends to Berkshire Hathaway this quarter. This deferral is permitted under the terms of our agreement with Berkshire deferral will allow us to maximize the paydown of our traditional bank debt and provide us with more flexibility in refinancing our upcoming maturities. This will change our rate on the preferred dividend from 8% to 9% this year. It is our intention to de-lever aided by cash from our political advertising revenue, incremental cash flow that may come from other top-line revenue, operating expense levers and financing offers. So when you hear us say every quarter that our top capital allocation priority is paying down debt we are backing that up with REX. Now here's Lisa share highlights from both the local media and Scripps Networks operations.

Lisa Knutson

Thanks, Jason, and good morning, everyone. I'm pleased to start by sharing that the advertising momentum we saw begin to build in the fourth quarter has continued as we move through the first quarter. That's true across both our operating segments from local media core advertising to several of our national network revenue streams. This morning I will give you color on our local core advertising categories for Q4 and Q1 and then discuss the trends we are seeing in the national and national advertising with Scripps Networks. Then I'd like to look ahead to this season's upfront, which will be upon us very quickly, and we'll wrap up with our political outlook in local media. For Q4, we saw our top five categories end up higher year over year. The top performer was automotive, up 9%, followed by home improvement, up 8% and the media and communications category up 6%. Also notable was Services, our largest category, which was up 3%. That is the first quarter services has finished up year over year in five quarters.
Moving into the first quarter, the services category is up quarter to date as our automotive home improvement and retail, we see continued momentum as we move through this quarter and are optimistic about a solid finish.
Turning to Scripps Networks, the fourth quarter saw us begin to build back of some of the direct response advertising dollar dollars that had declined as inflation spiked in recent quarters and easing of inflation has brought back DR advertisers who are reliant on tapping consumers' discretionary income demand is up and therefore store ad rates. As you know, the entire national advertising marketplace was challenged by last year's weak upfront, which was down 10% for Scripps. The upfront typically lays in a nice foundation, 30% or so our first quarter dollars for making up ground with our aggressive tactics to drive rate in DR and scatter. And that accounts for the momentum you see in our first quarter guide. In fact, scatter pricing is up more than 35% over upfront pricing. Connected TV revenue has continued to be strong for Scripps Networks 2023 saw a year-over-year increase of nearly 70% after backing out the impact of the low margin programmatic products we are discontinuing. Looking ahead, we're expecting more than 45% growth in our Connected TV revenue for Q1. And for the full year, we are guiding to more than 40% increase in CTV again, after removing the programmatic product to show the extent of organic growth. We're benefiting from continued audience growth as Americans seek out new options for ad-supported free TV, and we continue to expand our distribution within the marketplace. In Q4, we launched ion on Pluto and it quickly grew to be the number one network on its entertainment tier. Likewise, ION was named by Google TV as one of the most watched live channels of 2023. Ion is the only broadcast network available in the fast marketplace, which is a premium programming lineup that includes top-rated procedurals and live sports. If the analysts are correct in describing fast as the new cable than ION and the Scripps Networks are exceptionally positioned for more CTV revenue growth, I want to talk now about our aggressive approach to selling the upfront this coming season, why we expect significant significantly improve our outcome this year under the direction of our new Chief Revenue Officer, who came to us from NBCU. We are taking a much more aggressive stance. We have scheduled our upfronts for April ninth a month ahead of the large conglomerates in-person events. We are expecting several hundred buyers to attend the new approaches commensurate with the stronger position we hold as a result of our expansion into live sports, the most valuable content genres for linear TV, Scripps sport and our partnership with the WNBA and the National Women's Soccer League are the foundation for recasting ion into an entertainment destination for younger and more diverse audiences. Of scale, which is more attractive than ever to advertisers. Our National Sports sales efforts are drawing new premium advertisers to ION and other Scripps Network brands across all time periods, sports advertising is serving as the tip of the spear for scatter market advertising in general. To that end, we are focused on growing our base of regular advertisers drawn by our sports programming and expanding into CTV into our product and into our popular entertainment brands with a specific focus on multicultural.
In addition to the different sports, we are seeing ratings successes that also position us well to benefit as the ad market recovers. In fact, the Scripps Networks are the only national entertainment portfolio showing year-over-year growth in the first quarter, both in prime and total day, we are delivering 7% more households and 5% more total viewers than at the same time last year. This growth is separate and in addition to the audience growth and momentum we see we are experiencing on CTV.
I'd like to conclude by giving you color on our political ad revenue opportunity for 2024. As you know, each raised each market and each election year a different spending as determined by where the top-ups are taking place and where the national parties impact put their dollars to work. What we know for sure is that the ecosystem system of spending will be larger than ever. And we know that local broadcasters will continue to take the lion's share of that spending, it impact puts the total election spend at $10.2 billion compared to $9 billion in 2020. And the firm says 52% of the advertising spend will go to local broadcasters compared to 48% last year.
For script, Jason mentioned our clearest line of sight now is the range of $210 million to $250 million. Presumably, we're going to see the same two candidates running as in 2020, but there are a couple of new factors to think about here. One Biden support is not what it was in 2020. And too much of the money Trump has raised is going to his legal defense not to its campaign. So while experts say there will be a greater level of fundraising for this cycle. It won't necessarily be spent on the presidential race. The states where Scripps does expect to benefit from presidential election spending our Arizona, Nevada, Wisconsin and Michigan.
Turning to the U.S. Senate races, scripted local stations in seven competitive states, all of which have Democrats defending their currency. Montana is a big one with Senator Jon Tester, we're already seeing significant orders coming into Montana, where Scripps commands strong market share across the state. We're also well positioned in Ohio with two big ABC stations and in Wisconsin, Maryland, Michigan and Arizona, which also are projected to have tight Senate races with national money pouring into the support party's candidates in Nevada, our Las Vegas stations will benefit from both a contested Senate race and being in a prestigious presidential swing states. We have no contested governor's races this cycle and fewer competitive House races because of Jerry Mandarin and redistricting efforts nationwide. However, another area of opportunity that could be beneficial is our best is develop referendums in some of our bigger states, including Florida. It's estimated that up to seven states could have controversy or ballot issues. One such measure in Ohio last fall helped to drive our overperformance with political for the year. So we'll be watching to see whether those issues make it onto the ballot in key states this summer.
Before I turn it over to Adam, I'd like to thank Scripps employees for their hard work and perseverance during especially demanding time a year ago, the Company began a significant reorganization. In addition to realizing meaningful cost savings. We have made many changes to the way we do business. We have acted with urgency and rethinking the best ways to serve our audiences and our advertisers and to create new value for the enterprise while necessary. The changes haven't been easy and I credit, our resilient employees for making it work.
And now here's Adam.

Adam Symson

Thanks, Lisa, and good morning, everyone. It's been a tumultuous several months in the U.S. media landscape last September. After a 10-day impasse during which you would have thought we were witnessing the end of Pay TV, Disney and charter announced the landmark distribution agreement that reinforced the power of the cable bundle. Then just a few weeks ago, Disney Fox and Warner Brothers discovery announced the sports streaming partnership. And again, from the market's reaction, you would have thought it was literally the end of television. I completely understand why even the most seasoned immediate investor is struggling to sort through the chaos. I've been a part of this business for a while. And while it feels and it feels like the market is always ready to believe that worst about broadcast as a journalist, myself, leaving a company with a journalism mission. I prefer to deal in facts and steer clear of rumor, innuendo and speculation. So I thought I'd start this morning with what we actually know about these changes to the marketplace and how they impact Scripps to start the yet to be named sports focused streaming joint venture will be yet another virtual MVPD in an already crowded and somewhat established marketplace. It will also be competing with and likely cannibalizing other streaming products from the very same companies that make up the partnership at somewhere between $40 and $50 a month. It will be less expensive than most of its virtual MVPD competitors, and it will also be much less of a complete consumer proposition than the existing pay-TV bundles. If this is all about attracting the Sports Fanatic it's hard to say it's a slam dunk. March Madness will be incomplete. The Olympics will be missing out rate and subscribers will get only half of the NFL. The very sport that makes up the top 200 programs on TV. It's the introduction of yet another service into a fragmented landscape that will likely confuse and confound and already frustrated consumer. This is not to say that the new offering won't get subscribers as the partners say it will target cord cutters. We at Scripps will very much benefit from increased distribution fees and strengthen reach executives have confirmed over and over that affiliates like Scripps will be carried along and compensated just as we are with the other virtual MVPDs. I can't see why analysts nor investors would see this as some sort of killer app that, hey, if it adds new value to linear television, I'll be happy to report success and take advantage of its reach because we'll get paid for our ABC and Fox affiliates.
To be clear. Fragmentation and disruption were here well before the JV announcement. And Scripps has already been driving growth in this chaos, even if Wall Street has yet to recognize it, we continue to reap the benefits of retransmission revenue and expect to do so for years to come. Last year, we renewed 75% of our subs drove net distribution margin expansion and created new incremental value through agreements driven by our sports strategy. There should be more growth here to come from the productive relationships we have with both traditional and virtual pay TV platforms. Pay television is still a solid business that will support Scripps as we transition to our next growth phase because of our platform diversification strategy, distribution revenue accounts for less than a third of Scripps is total company revenue. So we are much less reliant on it than others. Our reach and revenue are buoyed by the growing over the year audience and our aggressive moves in connected TV strategies that are paying off and powering real financial growth aggressively tackling future opportunities even when they are disruptive has been a consistent thread in the Scripps story. And thanks to our foresight connected TV revenues for the enterprise should be well past $140 million this year. As Lisa pointed out, our networks portfolio stands alone growing ratings and with our focus on live sports momentum is on our side and the advertising market too. Once again, we benefit from pay TV reach but aren't limited by it. We are growing opportunity around it. Scripps is heavily leaning into the opportunity of free TV and we're making it even easier for media consumers with Tableau, which delivers the most popular linear programs via over the year, right, alongside another 65 or so premium FAST channels, you could even think of Tableau as the only fast platform to offer the NFL and college sports that in and of itself makes it a more compelling sports proposition than the new JV service and it's free. Tableau can now be found in most major retailers. Walmart.com launched in January, Amazon as the top retail partner accounting for about 60% of sales, the Home Shopping Network launch Tableau in October with exceptional results selling out its first airing in only a few minutes, and we expect Asia soon to drive significant portion of unit sales in 2024. As we move into this year, we'll continue to explore partnerships both regional and national to expand our footprint and scale. Since we launched our latest version in August, we have had incredible engagement with users. The first-party data shows that on average customers are watching two hours a day and that OTA programming accounts for most of that viewing 50% of that time is spent watching live sports news and talk shows speaking of data. Tableau is the only platform in the market that directly measures over the year viewing our back-end measures, all of the same data that set-top boxes do and more that valuable data and the monetization of the SaaS platform are the recurring revenue streams that drive value further downstream and will make up the average revenue per user metrics we'll share with you in the future.
While the Tableau platform makes TV easy, it's live sports and live news that make linear television most relevant today. And that's why we continue to aggressively pursue sports rights that are appropriate to our local market depth and the scale of our national reach with ION for local broadcasters. In particular, winning sports rights is yet another catalyst for the growth of over the air among cord-cutters and for the durability of the Pay TV bundle. It's a growth strategy that's creating immediate new value for just the two National Hockey League partnerships that we already have underway in Los Angeles and Phoenix, we project a 3% lift in core advertising revenue for 2024. And we continue to see many partnership opportunities with Teams ahead in both the near term and long term.
On the national side. Last year, we completed a very successful first season with the WNBA. Here's the power of ION's reach and our CT. V plus OTA plus pay TV strategy. The WNBA spotlight on ION, the Friday night franchise, we launched through the WNBA.s audience by 30%, while drawing a hefty premium above typical ad rates on ION for that time period, 65% of the revenue last season was from new to Scripps advertisers. This year we'll be back with the WNBA on Friday nights and it will be Women's Soccer on Saturday nights. Scripps is proud to be launching a franchise night double header for the NWSL. as part of the league's landmark rights agreements. We start the season on Saturday, March 16th, sponsorships and advertising sales are well underway and having the intended effect on our whole networks portfolio, 2023 was a tough year as a result of an unsteady and uncertain economy, but there's a lot to celebrate and the work this company is doing to best position itself for continuously improving near-term performance and long-term value creation. And now, operator, we're ready for your questions.

Question and Answer Session

Operator

Thank you. If you wish to ask a question, please press one then zero on your touchtone phone. You may remove yourself from queue at any time by pressing one zero. Again, if you're using a speakerphone, please pickup the handset before pressing the numbers. Once again, if you have a question, please press one then zero at this time. One moment, please. For the first question, we'll begin with the line of Dan Kurnos with The Benchmark Company. Please go ahead.

Daniel Kurnos

By excluding that, Adam, maybe just start with Sport. And can you just give us your thoughts on the impact of maybe diamonds being allowed to survive, I guess, for another 18 months, given the cash inflow over there and what that might mean for your ability to go after incremental local sports rights? And then look, obviously, you've been out there a lot on the on the JV and I think most people believe that it's going to be de minimus to the marketplace if it even gets off the ground.
But, you know, there's obviously been a lot of commentary about sports just moving to streaming over time. And I know that broadcast is included in all of these packages, but just kind of your thoughts on being able to sustain negotiating power and leverage within the sports industry is more and more sports shift to streaming.

Adam Symson

Yes, good morning, Dan. Thanks for the questions. On the Amazon investment into the RS. and um, I guess near term, it means the teams are committed to the RSN contracts until either the RS. and breaches those deals or in the event diamond seek some sort of discount that the team has decided to reject, which will then open up up the opportunity for teams to move in a different direction. Longer term, nothing about this investment changes the reality that the RSNs can't deliver the reach that team owners need, given the erosion we're seeing in Pay TV, and that's why they continue to turn to broadcasters. So all of this to say the RSN model is still in critical condition. I think you described it as sort of still thriving on this investment wasn't in any way a cure for what ails the RSN model. And I continue to expect that rates will move in the direction of local broadcast, and I continue to expect that Scripps will benefit from those moves relative to the joint venture. I don't know if there's more to say than what I already said in my prepared remarks. I guess I would say I think there is no math that supports the idea that local rights can move to streaming or move to a D2C product and support a teams need to field a good team and to win we've modeled it every other way. And while streaming will continue to be an important part on the local end for incremental reach, these teams need broadcast reach, and that's the direction they're and they're all moving in. So my enthusiasm for the opportunity for Scripps sports has not dampened at all on the national side, I will tell you speaking to the leaves the owners, um, you know, I think I think it's safe to say that reach continues to be the primary component for all of these team deals during the Super Bowl week you heard Roger Goodell say that he expects at least 90% of all games for the NFL to be broadcast on broadcast television, again, demonstrating the important power of retail. I don't think any of these leagues want to impair their asset over the long term by completely going behind a paywall and being inaccessible to most Americans, especially as we continue to see that streaming landscape get more fragmented, not consolidated. So we believe that there will be a continued opportunity for broadcast networks, new opportunity for networks like ION. And of course, we think the continued opportunity for our affiliates that are partnered with the with the big four networks.

Daniel Kurnos

Had it for the record. Adam, I said survive not thrive for the RS. and I think it's close to, but that's a different story.
Can you just early-stage just quickly give us a thought on the shape of national for the year, just given sort of the mix between general market and D are still kind of lagging a bit?

Lisa Knutson

Yes. As part of my prepared comments, I talked about the fact that obviously across the marketplace we had a of a lower upfront. And so therefore, we're really on being aggressive in that making up that ground in the scatter marketplace, but also in DRIM. seeing. Certainly we saw it in Q4, and we're seeing it again in Q1 where CPMs on fourth quarter were up 4% and over 2022 to Q4 and this year, we're seeing CPMs continue to be up versus our upfront pricing. In January alone, they were up 35%. So and seeing good momentum certainly in the general market space in the scatter marketplace.
I think and the other really interesting story for Scripps and I think in Adam's remarks, were really really well positioned to capture CTV revenue, both from an upfront perspective as we go to market, but also on YouTube, continuing to drive organic growth, but also some of the new launches that I mentioned in my remarks.

Daniel Kurnos

Got it. Super helpful. Thank you, both. Appreciate it.

Lisa Knutson

Thanks.

Operator

And we'll now go to the line of Steven Cahall with Wells Fargo. Please go ahead.

Steven Cahall

Thanks. So three for me. So maybe first, Adam, I appreciate your comment about some facts on the sports streaming JV rather than speculation. So I was wondering if you could just tell us what discussions you've had, especially with ABC and Fox as well. And whether those discussions have confirmed that this will be classified as a PD. in the minds of those counterparties, I think that would be really constructive to the market.
And then, Lisa, just on national and maybe picking up on the last question. So a big sequential improvement in the Q1 guide, does that turn positive by Q2?
It sounds like there's a lot of potential for it to do so, especially with where scatter is.
And then finally, just on the political guide, how do we think about the how much of that versus your 2020 political is due to just the difference in races. I think there you just have fewer congressional races and then how much of that is attributable to the comment you made about Trump's pack, putting more towards legal and less towards that?
Thank you.

Adam Symson

Well, Steve, I think I've said over and over I've had direct conversations with executives at the top of Disney and with Fox. And they they describe this as it is the virtual MVPDs and they describe the arrangement will be consistent with the arrangement affiliates have with other virtual MVPDs that will be carried along because clearly our broadcast, our broadcast networks or their broadcast networks are our core to the offering, given how much of the NFL or really the only NFL offering will come through the broadcast stations and that we will be compensated in exactly the same mechanism that we're compensated for other virtual MVPDs. So I don't know if we can make it any clearer if in fact, these and this is literally what was said to me on the day of the announcement if these executives, as they say, are true to their word and will aggressively pursue cord cutters in order to bring them back to linear television. This stands to benefit Scripps in increment incremental distribution and incremental fees. Is that I mean is I think that that is that helpful.

Steven Cahall

It is yes.

Adam Symson

Okay. This comes directly from ABC and Fox, and this is consistent with what all of the affiliates have been saying. This is just another virtual MVPD, and we will be compensated for the carriage of our affiliates through this virtual MVPD.

Lisa Knutson

Stephen we are seeing positive momentum that started I think in on certainly in our performance in Q4 and moving into first quarter with our guide, we are optimistic on as we continue to see the strength in scatter and in MDR rates, both rates are up year over year and year to date in first quarter compared to 2023. So we're really aggressively pursuing on you that I think we mentioned in our guide coming in potentially flat to last year, which I think is just probably certainly best in peer performance. And we expect that momentum to continue throughout the year as for political and there, there are differences, and I mentioned some of those differences in my prepared remarks. And after redistricting, there's certainly a less competitive House races than we saw in 2020. And some of the presidential toss-up states have changed. And Florida was only always squarely a swing state and with sort of migration into Florida over the last several years that has changed. And so we're seeing some of those changes affect and give a little bit of less visibility into where the money will actually be spent given the Tulsa races this year. I think I mentioned the competitive races for the Senate, which was really were very, very strong this year. And and we expect and are already seeing really great spending in Montana in early this year and also in the back half of the year already lean in a good foundation for the year.

Steven Cahall

Thank you.

Operator

We'll now go to the line of Craig Huber with Huber Research Partners. Please go ahead.

Craig Huber

Yes, hi. Thank you. My first question, if I could. Let's focus on costs.
If we could please, maybe Jason or somebody else. How are you feeling about your cost base this year? I mean, you've obviously talked to this $40 million plus cost savings plan that should be, I guess, fully in the numbers by the middle of the year. Are you expecting that you're going to have to step up further on the cost front?
Are you guys or are you guys pretty comfortable with your cost run rate now as you kind of think about your ad revenue trends are et cetera?

Jason Combs

And I think that from a cost perspective, we have been aggressive with the restructure. We will have 30 at more than $40 million sort of run rate annualized savings by the middle of this year. And I think the focal area would be just continuing to manage things as efficiently as possible. We have things this year when you talk about political, when you talk about some of the green shoots at least talking about in terms of national ad marketplace, that should have should be a great benefit to the bottom line.
In addition to our tight expense management, but I think you'll see us continue to manage things really tightly as we move throughout the rest of the year.

Craig Huber

Jason, a housekeeping question, please. On your retrans subs, what was the decline year over year that goes into your retrans revenue number that you had in the fourth quarter, please?

Jason Combs

And we were down mid-single digits, which is consistent with where we've been for a while and actually was a slight improvement versus the prior quarter, but still in that mid single digits percent range.

Craig Huber

Okay, good. Thank you for that. And then your other revenue line and the EBITDA, can you just help us how should we think about that line EBITDA and revenue for the full year? What are you budgeting there? Please.

Jason Combs

Yes. And so that other the other rollup includes a bunch of different things, including Tableau, which Adam talked about, where we continue to invest as we launch that. So we guided to a loss of about $7 million in the first quarter. I would say in general that will likely be somewhere between $7 million to $10 million each quarter. This year with revenue growing as the year moves forward.

Craig Huber

Okay. Very good. That's all I have right now.

Adam Symson

Thank you.

Operator

As a reminder, your place yourself into the queue, you may press one, then zero on your telephone keypad. We'll now go to the line of [Jeff Pesch] and with Phoenix. Please go ahead.

Yes Thank you for your time here. Just one quick question.
It sounds like you're going to defer the Berkshire preferred payout. What's the plans for reducing the bank debt and pushing those out? Is there a plan for also going out past 2027?

Jason Combs

Yes. So the decision to defer the Berkshire deal, and that's a decision that we make sort of on a quarterly basis get elected this quarter to defer that comment really allow us to focus on maximizing the paydown of our traditional bank debt. And it really gives us, from our perspective, more flexibility in terms of debt paydown and refinancing our upcoming maturities. And we also are very focused on the fact that we do have a maturity coming up in 26 that we're keeping a very close eye on the debt markets right now, which have improved their last couple of months to determine at what point in time we want to go out and take action and look to refinance that debt, which was the goal would be to have that refinance at least 18 months in advance of maturity.

Great.
Thank you.

Jason Combs

Thank you.

Operator

We'll go to the line of Michael Kupinski with NOBLE Capital Markets. Please go ahead.

Michael Kupinski

Thank you for taking my question. Just a quick one on. It seems like the network business, the OTA business is getting more competition. And a couple of your peers have indicated that they're crossing certain hurdles in terms of distribution across the country. And I know that you're seeing some improving trends there, but I was just wondering if you can kind of give us a taste of what advertisers are seeing in terms of maybe shifting some dollars to some of the competition that's out there and whether or not you're hearing anything like that. And if you could just kind of give us a state of just the business in general for the OTA market?

Lisa Knutson

Yes. Mike, it's Lisa. We're not seeing really any competition from, I think the expanding OTA multicast networks. In fact, we're I've seen strength in our D. our ad rates. We're also seeing strength in demand for DR advertising. Typically when those other networks are launching OTA there primarily on D. our advertising and it's very sort of bottom of the barrel advertising and we really our networks are premium programming, and we're competing in both really the hybrid DR in the premium D, our ad rates. So we're not seeing any or worried about any of that competition.

Michael Kupinski

Catch-up and interest in general in terms of core advertising on the local level? I mean, are you seeing much variance between local and national and the core level outside of political, of course.

Lisa Knutson

Yes. I think some of the trends that we're seeing, both on the local level, which I included in my prepared remarks, sort of the categories that are up year over year that we have different categories, certainly in the national ad marketplace in the local marketplace. But I would say the certainly the momentum is equal across both across both segments.

Michael Kupinski

Okay. That's all I had.
Thank you.

Operator

Thank you. We will return to the line of Craig Huber with Huber Research Partners. Please go ahead.

Craig Huber

Thank you for auto advertisers. I'd be curious to hear your updated thoughts there on both the national level and local for are we right, but does not look terribly. So therefore, I will give you a?

Lisa Knutson

Yes, I will give you a little bit of Q4 and then full year and some remarks to take us into Qone. So fourth quarter auto was up as we said, 9% versus Q4 of 22. The full year 2023 auto was up 10%, which is really strong. This marks really the sixth consecutive quarter of growth and we sell to E&O really each quarter and last year was and we saw great growth in Q1 of 2024. So far in January, we finished up 3% and pacing to be up and potentially up to 7% in February. And it's just a little too early to say about March. So we're seeing that momentum continue and domestic dealer auto groups were up year over year last year. Foreign dealer groups were up, but it was really barely up. It was 1%. And we're continuing to see where things are lagging as manufacturers and from a domestic perspective, works were and were down year over year last year by 9%. And for Inmet, FineSim s manufacturers were up about 24%. So again, automotive last year, great story and continuing really that momentum into 2024.

Craig Huber

And also, Jason, how you calculated your banks, your net debt to EBITDA ratio of trailing eight-quarter basis. What was that at the end of the year?
We just finished. What do you project it to be at the end of this year, please?

Jason Combs

Yes. So it was 5.7 at the end of last year. And we're focused, as I said in my prepared remarks, really focused on paying down debt and delevering. We're not giving a year end leverage target right now because of the wide range of outcomes. When you talk about, for example, the political guide we gave, which can really swing that number as well as some uncertainty in the timing of the advertising rebound, which again, can really move that number as well. So we're not giving a specific guide, but as I said, we're focused on de-levering this year and using the cash flow. We're going to get through the political cycle through growth and continued growth in connected TV and the benefits of our expense restructuring to paydown the maximum amount of debt costs.

Craig Huber

My final question I could ask on the CapEx side. You mentioned onetime project to take that out. What would your underlying CapEx be for the year, please?
More than maintenance type level trying to get to?

Jason Combs

It would be around $60 million.
Okay, great. Thank you for guys.

Operator

I think and with that, we have no further questions in queue at this time. Please continue.

Lisa Knutson

Thank you very much, Rich, and thanks to everyone for joining us today. Have a great day.

Operator

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