Good morning. My name is Kelly. I will be your operator for today. At this time, I would like to welcome everyone to the Gray Television fourth quarter 2018 earnings conference call. All lines have been placed on mute to prevent any background noise. After the prepared remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star then one on your telephone keypad. If you would like to withdraw your question, please press the pound key. Thank you. I would now like to turn the call over to Hilton Howell, Chairman and CEO of Gray Television. Please go ahead, sir.
Thank you so much, operator. Good morning, everybody. I'm Hilton Howell, the Chairman and CEO of Gray Television. Thank you so much for your time this morning and for joining our fourth quarter 2018 earnings call. I am delighted to announce that we are joined for the first time by our President and Co-CEO, Pat LaPlatney, who has joined us effective January 2nd and who will be with us going forward. As usual, we have our Chief Legal and Development Officer, Kevin Latek, and our Chief Financial Officer, Jim Ryan, both with us this morning. I will ask Kevin to provide a quick disclaimer before we begin.
Thank you, Hilton. Good morning, everyone. Certain matters discussed on this call may include forward-looking statements regarding, among other things, future operating results. Those statements are subject to a number of risks and uncertainties. Actual results in the future could differ from those described in the forward-looking statement as a result of various important factors. Such factors have been set forth in the company's most recent reports filed with the SEC and included in today's earnings release. The company undertakes no obligation to update these forward-looking statements. Gray uses its website as a key source of company information. The website address is www.gray.tv. We also will post an updated investor deck to the website within the next two weeks.
Included on the call will be a discussion of non-GAAP financial measures, in particular, broadcast cash flow, broadcast cash flow less corporate expenses, operating cash flow, free cash flow, and certain leverage ratios. These metrics are not meant to replace GAAP measurements but are provided as supplements to assist the public in their analysis and valuation of our company. We include reconciliations of the non-GAAP financial measures to the GAAP measures in our financial statements that are available on our website. Now I'll return the call to Hilton.
Thank you, Kevin. The big news, of course, is that Gray closed its acquisition of Raycom Media at the beginning of the year. The bad news is that we're just going to be talking about Gray heritage at this point. The even better news is, before we discuss our transaction, the milestones that we hit in the fourth quarter were outstanding. Our revenue for the fourth quarter of 2018 was $328.2 million, or +40% from the fourth quarter of 2017. Importantly, this was our all-time best quarterly revenue set ever. Our net income for the quarter was $88.3 million and was our second-best fourth quarter net income. Our broadcast cash flow was $172.8 million, which was double that from the fourth quarter of 2017. This was our all-time best quarterly broadcast cash flow result.
Our political advertising revenue was $83.2 million, which was about 5% higher than our political revenue in the fourth quarter of 2014, which was the most recent non-presidential election year after giving effect to stations acquired and divested between 2014 and 2018. This was our highest fourth-quarter political revenue in a non-presidential year ever. Our gross retransmission revenue for the fourth quarter was $93 million, and our net retrans revenue was $50.3 million. Both of these figures also set new quarterly records for us. For calendar year 2018, gross retransmission revenue was $355.4 million, and net retrans revenue was $190.4 million. Finally, as of December 31st, 2018, our total leverage in combining our senior credit facility was 3.01 x on a trailing eight-quarter basis after netting out our total non-restricted cash balance of $667 million.
In short, the fourth quarter of 2018 was an excellent quarter once again across the board. Given that performance, and even before considering that we had nearly doubled our size with the Raycom acquisition, I believe that our stock remains deeply undervalued. On the heels of the fourth quarter momentum, we completed our acquisition of Raycom Media on January the 2nd and made it effective as of January the 1st so that we could begin this year with a clean break from legacy Gray. As you know, upon closing, we own and operate television stations and leading digital properties in 91 television markets, from Alaska and Hawaii to Maine and Florida. This portfolio includes the first or second highest-rated television station in 85 markets. Collectively, our television station portfolio broadcasts roughly 400 separate program streams.
Closing the Raycom deal was no easy feat, and I want to take a moment to acknowledge the literally heroic efforts that I witnessed in the fourth quarter of 2018. Remember, we set the ambitious goal of completing multiple complex closings simultaneously in addition to the actual acquisition of Raycom. Those included financing transactions, the spin-off of Raycom's newspaper and AdTech businesses, several television stations with four different broadcasters, and internal reorganization of both personnel and corporate subsidiaries. We made all that happen over the holidays. Gray's shareholders were clearly well-served by the extreme dedication, sacrifices, and professionalism of all the countless people who made this all look easy.
I want to publicly thank my colleagues at legacy Gray and legacy Raycom, as well as the many others at the divestiture buyers and the professionals assisting all these companies at the banks, law firms, and accounting firms that have been involved in these transactions. They were truly heroic. Our new scale will give Gray the opportunity to face the dynamic changes in our industry and local communities with new vigor and added resources. A great example of the new opportunities before us is this morning's exciting announcement that Greta Van Susteren has joined Gray as our Chief National Political Analyst. On a personal and professional basis, I am thrilled with this.
In this new role, she will provide our local newsrooms in 93 markets coast to coast with the expert, unbiased, professional coverage of national and international developments that has been the hallmark of Greta Van Susteren's distinguished journalism career. While I cannot provide details today, we can confirm that Greta also has two nationally syndicated shows in development with Gray. Over her long career on cable news channels, Greta has distinguished herself as a journalist first. She is known for her knowledge, experience, and unbiased approach to the controversial issues of the day. As such, we have found a trusted, respected expert on national and international affairs to complement the trusted, respected professionals in our local newsrooms in cities and towns across this country.
Her decision to join Gray from among all the many other quality news operations out there reaffirms that our investment in quality local journalism and service to local communities does in fact pay off. At this point, I'm very happy to introduce Gray's shareholders to our new President and Co-CEO, Pat LaPlatney.
Thank you, Hilton. Good morning, everyone. I'd like to echo Hilton's comments regarding the extraordinary effort on the part of all Gray employees and our professional partners to close the agreements. Tremendous amount of work has been accomplished in a remarkably short amount of time. We've amended our agreements with both Nielsen and Comscore, resulting in significant cost savings for the company. As of today, we are now handling all national business in-house, which will provide our stations with revenue upside and put a huge dent in our cost of sales. Jim will talk in greater detail about the synergy effort, but I can tell you that we are well on our way towards the stated goals. We're also moving forward on revenue development efforts in a number of areas and expect to see progress throughout 2019.
Jim will cover the numbers in detail, but Q1 has been okay, with March showing an uptick. We have a sizable Olympic revenue number from February 2018 because of our large NBC footprint, and that has impacted our comps in the first quarter. It's early, but we are hoping that the momentum from March swings into the second quarter. With that, I'll turn it over to Kevin for his update.
Good morning again. We all certainly kept pretty busy in the fourth quarter, not just with the Raycom and related transactions, but also our core business, political coverage, and political sales. As luck would have it, Gray had very few retransmission consent agreements expiring at the end of 2018. It accounted for roughly 1% of our total subs. Still, as usual, we concluded those renewals on very satisfactory terms without any disruption. Going forward, we anticipate having about 22% of our MVPD subs under contract expiring around the end of 2019, with 56% of subs under contract expiring around the end of 2020, and the balance expiring again at the end of 2021. You saw in our release today that we're also guiding to a 22% increase in gross retransmission consents for this quarter and 20% for the year.
I'll also note that while we had some delay in reports on OTT subs, it appears we have crossed 1.25 million OTT subs around the first of this year. Those following Gray for the past few years know that most of our network affiliation agreements have been scheduled to expire at some point in 2019. In the fall of 2017, we announced that we had extended the terms of all of our affiliation agreements with CBS regardless of expiration date. Similarly, we announced in the fall of 2018 that we had extended the terms of all of our affiliation agreements with NBC, which had been scheduled to expire at year-end 2018. Shortly after closing the Raycom transaction, we announced that we had extended the terms of all of our affiliation agreements with ABC for all of our legacy Gray and all of our legacy Raycom stations.
Most of those contracts had been scheduled to expire at year-end 2018. This morning's release announces that we also recently extended the terms of all of the legacy Raycom affiliation agreements with CBS. We're off to a very good start. We have one major network with expiring affiliation agreements this year, and that negotiation, of course, is already underway. Turning to M&A, we have said consistently for many years that we look at all number one and strong number two ranked television stations offered for sale regardless of market size. The Raycom transaction has not sent us to the sidelines. Indeed, we recently entered into an agreement to acquire United Communications television stations in Watertown, New York and Mankato, Minnesota for $45 million. These are terrific stations that will fit very well into our portfolio of similar stations with tremendous records of service to the local community.
We anticipate that the transaction will be at least leverage neutral, and if certain opportunities can be executed as we hope and expect, the United acquisition can be a de-leveraging transaction for us. We are continuing to look at opportunities to grow the company through more small tuck-in transactions like United, potentially larger acquisitions of high-quality stations, and some non-broadcast, yet complementary ventures. In all cases, we will continue to be guided by our public commitment to grow the company prudently within the limits of our balance sheet. Thank you for the time. I'll now turn the call over to Jim Ryan .
Thank you, Kevin. Good morning, everyone. As Kevin already said, fourth quarter and full year 2018, we're very pleased with. Obviously, 2018 was a record-setting political year for us, and we think that bodes very well for 2020. Turning to our first quarter guidance, I'm going to focus my comments on the combined historical information that we've put out for Q1. I'll also point out that in the 8-K that was filed a little earlier this morning, there is an exhibit where certain select combined historical revenues and certain select operating expenses for 2018, 2017, and 2016 have been published by quarter, so that should help everybody with their modeling. Remind everybody that combined historical does not include expected synergies of any transaction. It is merely the combination of the historical records, adding in acquisitions and subtracting out divestitures.
Our guidance for Q1 does not include the two United stations that we will begin operating tomorrow under a pre-closing LMA. Those stations, while they're great stations, very powerful in their local markets, we're delighted to be acquiring them, are not material to the quarter or to any of Gray's full-year operations. Our core local and national is expected to be down in the mid-single-digit range. As Pat mentioned a moment ago, we had $12.7 million of total local and national revenue in the Winter Olympics last year, which we're going again. In that $12.7 million, we had $3.6 million of auto-related advertising. It clearly is a significant event for us in 2018, which does affect comparability a little bit for our 2019 Q1. However, if you exclude the Winter Olympics, we would expect our core local and national to be approximately flat in Q1 2018.
We're very pleased with the anticipated growth in retrans revenue of a low 20% range. Remember that legacy Gray and legacy Raycom, as Kevin just said, had very few MVPD subs to renegotiate. We've commented before that Gray's MVPD contract, the annual escalator is generally a low double-digit percentage. We are very pleased that our overall retransmission growth in Q1 will be up 22%-23% gross revenue, retrans revenue. That obviously is reflecting the synergies of Gray's after-acquired clauses for the legacy Raycom stations. We are reaffirming our previously announced net retrans synergy of at least $15 million for the entire year. Our broadcast expenses in Q1 have two significant components.
First, there is $33 million- $34 million in non-recurring expenses associated with the Raycom transaction, including $27.6 million of expense to terminate the national rep firm and about $5.3 million of severance or other compensation-related expense in the broadcast expense line. The second, as Kevin mentioned, our NBC agreement repriced under the new agreement effective January 1. Retrans is expected to grow quarter-over-quarter $19 million- $20 million. If you exclude both of those items, our broadcast operating expense in Q1 would be essentially flat to Q1 2018 on a combined historical basis. Similarly, our corporate expenses in 2019 are impacted by transaction-related expenses of $29 million- $30 million. That is M&A advisory fees, legal and accounting fees, severance, and other transaction-related compensation, which would be non-recurring.
If you exclude those non-recurring charges, our corporate expense would be approximately flat to 2018 on a combined historical basis. I would like to give some updates on pro forma leverage for 2018. We have not yet completed the preparation and audit of the carve-out statements for Raycom for the year ended 12/31/2018. Therefore, my following comments are on a preliminary basis based on internal forecasts and do not reflect the audited statements. That being said, outstanding debt post-closing was $3.97 billion as of 12/31/2018, or would have been. We estimate our cash on hand as of closing would have been about $200 million. On a trailing eight-quarter basis as of 12/31/2018, our operating cash flow as defined in our senior credit facility, we estimate would have been in a range of $780 million- $795 million.
That is higher than when we announced the deal last June. Obviously, that has in part reflected very, very strong political winds in the second half of the year of 2018. On a trailing 12-month basis, the operating cash flow would be in a range of approximately $880 million- $900 million. Those cash flow estimates do include the impact of the $80 million of synergies we announced when we announced the deal, and I will update you on the synergies in a moment. To put these results in perspective, if you look to our November investor presentation that is on our website, our operating cash flow, combined historical with synergies for 2016 was approximately $803 million, and in 2017 it was about $686 million. Our leverage ratio at 12/31/2018, we are currently estimating would have been somewhere between 4.85x and 4.75x .
If you recall, when we announced the deal, we said we would be approximately 5x , and that announcement was last June. When we closed the deal in January, we said we would be between 5x and 4.75x, and clearly our expectation would be towards the lower end of the range, closer to 4.75x. That leverage ratio would not reflect the synergy number. We currently estimate free cash at December 31, 2018 would have been a range of $500 million to $525 million. If you go back to our investor deck for November, it is on our website, 2016 free cash was estimated at about $401 million, and 2017 free cash was about $300 million. We are very, very pleased at where we are at the outset of 2019. Our common stock post-closing is approximately 100 million shares outstanding for both the GTN and the GTNA on a combined basis.
Let me update you on our synergies. We had said at the outset that we expected $80 million of synergies. To date, eight weeks in post-closing, we are at $61 million that's been essentially locked in. That $61 million represents $22 million of payroll and benefits we have already either eliminated or have scheduled to eliminate 135 positions across the entire combined company. Also, given changes to our benefit plans, we will have an additional approximately $4 million of cash savings from benefit plan changes. For contractual arrangements, we have savings of $18 million to $20 million. That would reflect the annual run rate of the former national reps commission. It would reflect the savings in renegotiating the Nielsen and Comscore agreement on very favorable pricing terms to Gray. Our net retrans, we're very comfortable that we'll have a net retrans uplift of at least $15 million.
The legacy Raycom aircraft unit has been closed down, saving approximately $2 million a year. The plane has been sold with net proceeds of approximately $2.7 million. I would say that, first of all, those expenses, those savings, those synergies will all be realized ratably as we go through the year. We, I think, are off to a very good start at $61 million, about 75% of our goal. There will be other opportunities for us as we progress through the year. You know we will not be bashful about taking every opportunity that we can uncover. At this point, I'll turn the call back to Hill.
Thank you, Jim. At this time, operator, we would like to open up the lines for any questions anyone may have.
At this time, I would like to remind everyone, in order to ask a question, please press star, then the number one on your telephone keypad. If you would like to withdraw your question, please press the pound key. Your first question comes from Marci Ryvicker from Wolfe Research. Please go ahead, your line is open.
Thank you. You spent a lot of time on the gross retrans number and the synergies. Can you remind us what the net retrans guide is for? Is it still low single digit year-over-year growth?
Hi, Marci, it's Kevin. I can remind you, because we've not said anything yet on net retrans for the year. We still have one network that we have to negotiate our terms that all those current agreements expire in the middle of the year. We don't know where they're going to land on that renewal, therefore, we don't know what the reverse is going to be this year. As we've been telegraphing with all the contracts, the other big three contracts mostly expiring in 2019 and being repriced in 2019. There is a larger than normal step-up in reverse comp this year just because of the timing of all those network contracts. Last year was, I would say, a good year. This year's margin's going to be a bit compressed, our growth is probably higher than a lot of people expected this year.
We're not ready to give a net guide for this year just yet.
Okay. The free cash flow, the $500-$525 that you would estimate for 2018, is there anything one time in that that would not recur in 2019 or 2020, like taxes?
Just to be clear on that, I am not counting any one-time cash payments, for instance, the $27+ million of national rep termination fee in that number because it is non-recurring. It would include an estimate for taxes for 2018 that would be what appears to us to be a normal run rate in taxes. There were no taxes directly linked to the transaction itself.
Would it be safe to think that 2020 would grow above that?
Yes. Now, obviously, that is going to depend on where political lands in 2020. I would expect our gross retransmission will obviously grow, especially as we reprice 20%+ of our sub base at the end of this year. I would say 2020 is going to be a very strong free cash flow year for us.
Great. Thank you so much.
Marci, it's great to have you back.
Thank you.
Your next question comes from Aaron Watts from Deutsche Bank. Please go ahead. Your line is open.
Hello, Aaron.
Hey, guys. Hey, thanks for all the detail today. Couple questions from me. I guess, first, on the core advertising environment, can you maybe talk a little more about the cadence you saw post-election, November, December, into the first quarter, and maybe just broadly some goalposts around what you see core doing in 2019?
I'm going to look up. I can give you a number for December. Just give me a second to pull it out of my stack of cheat sheets. Maybe I'll let Pat start with-
Sure. I mean, look, I could speak for legacy Raycom in general. We did see some momentum in fourth quarter. We were pleasantly surprised by that. Again, our first quarter is okay. When adjusted for Olympics, it's better than okay. We are seeing some momentum in March, probably a function of early second quarter starts, which will happen this time of year. Candidly, it's really too early to give any further guidance for Q2 or remainder of the year, in my opinion.
Just given that it's such a big piece of the pie, any insights you can give on what you're seeing in the auto category?
I can speak to that a little bit. We had about $3.6 million of auto advertising in the Olympic broadcasts last year, so that obviously creates quite a. It skews comparability a little bit. When we take that out, I would say our auto is right now in Q1 looking like it would be down mid-single digit range, say 4%-5%, someplace in there looks like it's where it's going to land. That, again, is excluding the $3.6 million of auto from the Olympics that was really incremental last year. The other comment I would make in general for auto is we are seeing Ford corporate cut back, we'll be keeping our eye on that just like Dodge, Chrysler, Jeep did last year. It looks like it's Ford's turn this year, that's probably worth a $1 million hit to us in Q1.
That's helpful. Jim, I'll throw one more your way here. You talked about being give or take around 4.8x leverage pro forma for the transaction as you ended 2018. Can you refresh us on where your head's at, where you see that leverage going over maybe the next year or two years?
Absent any large transaction, I think leverage at the end of 2019 is somewhere in the lower 4s, then we're somewhere at the end of 2020 comfortably in the 3s.
Perfect. Last one from me. Appreciate the time. A little bigger picture. We saw private equity step into the space in terms of making an acquisition recently. Curious what your view is of that, if it's a one-off situation or you think we'll see more of that, and how does that impact the bidding environment from a competitive standpoint as you look at assets going forward?
The price of poker may have gone up a little bit. We're happy to have Apollo and guys. We know those guys and they're smart as whips, and we're delighted that they see the value that we see in local broadcast. We heartily welcome them to the space and wish them the best with their new acquisition.
Fair enough. Thank you.
Aaron, just a quick follow-up. Your December question as far as what core did post election day, December was up a nice solid 4%, which was very encouraging to us.
Thanks, Jim
Your next question comes from the line of Dan Kurnos from Benchmark Company. Please go ahead. Your line is open.
Good morning.
Great. Thanks. Good morning. Nice to see some recognition of the actual Raycom that's getting factored in here. Just looking at your sub-trends maybe, Kevin, I think that's the other piece of the equation. Obviously, you gave really healthy guidance, but we heard that there was some noise at the end of the year. Just what you're seeing from linear and OTT and how that's playing out for you over the balance of the year.
I think more of the same. MVPD subs are dropping for everybody. One operator's seeing bigger drops, which is probably not much of a surprise given they're not carrying some marquee programming and are dropping seemingly every broadcaster that they have a negotiation with. We're probably seeing some bigger fluctuations. Some of those subs seem to be moving to other operators. I don't think that trend has changed much recently or will change going forward. At the same time, OTT subs are growing frankly faster than we expected. We had about 1.25 million OTT subs around the beginning of the year for the whole company. That's a lot more than we expected at this point in time. Even I peel off Raycom, it's still gone faster than we thought.
It's unclear how many of those folks are going to sort of stay where they are or move around different OTT providers, but it doesn't really matter. The economics are decent and I'd say we're pleasantly surprised at how retrans is doing so far this year.
Got it. Thanks, Kevin. That's helpful. Jim, I know you never like to go out on a limb on political, but maybe just at least for the off year. I think if I'm looking through the 8-K, you did $31 million or so on a CHB 2017. Obviously you're starting a little lower. It'll probably be back-end weighted. Just any thoughts on how political could pace this year?
I think it somewhat looks like 2017, although I'm trying to recall. I think we had in the 2017 cycle, maybe a little bit more off-year governor's races than we do in the 2019 cycle, that might mute it a little bit. You're right, it'll be very heavily back weighted and no matter what, it's just not going to be a big number this year because it's an off year for us and at least right now, there's no huge catalyst. Having said that, while the dollars are still pretty small, we've actually gotten two 2020 presidential orders in Iowa already this year.
I was about to say when Jim was talking about that, our company, to my memory, and I've been around almost 30 years now, we've never gotten presidential ad money this early in the cycle. For us to have presidential ad money at this point, I think it's going to be literally just raining money in 2020. In all of our states and Gray happily is in essentially every battleground state that is defined by FiveThirtyEight in the country, literally every one. I don't think the Democrats are going to make one mistake in terms of ignoring Wisconsin, Michigan, any of the rest of those areas that are so important, in 2020. I think, the Republicans, you're not going to have, like we had with the last presidential election year, the president sitting back thinking his celebrity can win him the election.
He's sitting on a huge war chest right now, I think 2020 is going to be gargantuan. My opinion.
Well, fair enough. I guess we shall see. Thanks for all the color, guys.
Your next question comes from the line of Michael Kupinski from Noble Capital Markets. Please go ahead. Your line is open.
This is Tarun Aswani for Michael Kupinski. Raycom had a fairly developed program arm with a decent amount of original programming, outside of news content. Can you give us some color on your plans for those operations and, given the much larger platform that you will have with Raycom, does the company plan to more fully develop original programming moving forward?
Yeah, we just made a big announcement yesterday with Greta. That's one project. Candidly, I don't see a bigger move into originals, although as you know, we do have production companies in our portfolio, which gives us capabilities. In terms of growing originals for syndication, there'll probably be some of that, but not a huge focal point right now. I will say we're very proud of the production companies that Raycom brought to our portfolio. While in comparison to the size and the cash flow and the revenue that's generated from our television station portfolio, it's relatively small. Each and every one of them is substantially profitable, and they turn out outstanding products just really across the board, from Raycom Sports to Tupelo Raycom to RCN Studios to Swirl Films here in Atlanta.
They are assets that Gray is proud to own. We look forward to explaining their unique niches to you in the future because it is an added area for growth. At some point, all the TV stations in the world are going to be bought up, and we'll have to look for other areas to grow our business, and they've given us a great foothold in that regard.
Great. Thank you very much.
Our next question comes from the line of Steven Cahall from Royal Bank of Canada. Please go ahead. Your line is open.
Thank you. I was wondering if you could talk a little bit more about the one big four renewal you haven't done yet. That company is also going through some transformative M&A, I wondered if that at all impacted the way they're coming to the negotiating table. Also on the pro forma free cash flow numbers that you gave, does that give your future cash interest expense? As we think about trying to forecast 2019, do we need to build in a little bigger cash interest expense given the debt you've just raised? Thank you.
I'll take the first question. On the other renewal, I'm not seeing anything particularly different than what we've talked to them about in years past. That conversation started a little slower than others, which was not a surprise, there's a lot of important market share, we'll get through it. There's nothing that we've seen that is really all that different than what we've seen in the past renewals. Jim, do you want to?
If you take our current capital structure now and go through the different tranches, you can make some assumptions on LIBOR, but at current LIBOR rates, it's about $220 million-$225 million per year. Obviously, there's the preferred dividend now, too, of $52 million a year, both of those are taken into account in the free cash that I was talking about.
Great. That's very helpful. Thank you.
Again, if you would like to ask a question, please press star then the number one on your telephone keypad. Your next question comes from the line of Jim Goss from Barrington Research. Please go ahead. Your line is open.
Thanks. I was wondering with the Greta Van Susteren programming, are you planning on making that a Gray exclusive, or will that be syndicated to others? Will that tie into your efforts to sell political ads in the coming years?
We will make an effort to syndicate it and sell it to others. We will, obviously, we've already identified clearances within all, really, 93 of our markets for a space on Sunday, we will be looking for syndication.
Okay, will there be political ad placement on that as well, that's one of the benefits of having this sort of person?
Yeah, Jim, Greta is joining our news operation right now. We're talking about some shows that we would plan to nationally syndicate, but we don't have details on what those shows may be or what would be in them. Right now she's joined us as an analyst, and she'll be appearing on our local newscast as soon as this afternoon.
Okay, the switch to Comscore from Nielsen, I wonder if you could talk a little bit more of the value you expect to bring from that, maybe the rationale behind it. I think you're not the only one to have done that.
I'll let Pat talk from an operations standpoint. I will say that we've had a lot of frustration with our other service, particularly in the diary markets. In a lot of markets, many markets, we had both Nielsen and Comscore, and we were able to see and basically compare the two for a significant period of time. Comscore data, which as you know, comes from many more data sources, data points and diaries, were much more stable, much more responsive to what we were seeing in the news. I mean, in the market and what was on television than what was showing up in the diaries. Despite other conventional wisdom, as I can tell you, all of our stations do better in Comscore than they do in Nielsen anyway. From that perspective, Comscore's stability was very important to us.
I'll let also Pat a dd some thoughts.
Yeah, sure. We had moved to Comscore in the diary markets, I think, three years ago. This really isn't a big change. We still work with Nielsen in larger markets, and we've consolidated with Comscore in the diary markets.
Will it also give you better information to justify any improvement in pricing power in those markets? Is that part of the rationale?
No, it's not, Jim. That was not part of the rationale.
Okay. Lastly, capital allocation priorities. What is the rank order of your desires and plans?
When we announced Raycom, we said our number one priority was to close Raycom, after that, we would put a focus on bringing our debt down but still keep an eye open for smart acquisitions that made sense for us. Nothing has changed in that regard. Right now we are focused on paying debt down as we get to a different level. Not to get ahead of the board, we anticipate they'll be looking again at capital allocation returns to shareholders. I have nothing to report to you this time. Again, that will be the board's decision. We have said since Raycom closing that our focus will be paying debt down once the deal closes, which is now our focus.
All right. Thanks very much. Appreciate it.
There are no further questions at this time. I'll now turn the call back to the presenters for closing comments.
Well, I just want to take a moment to thank every one of you for joining us this morning. We have a lot of exciting things ahead. We're thrilled to be bringing all of the professionals of Raycom and all of their operating units within the new Gray umbrella, I think it's going to lead to remarkable results in our future quarters and for the year, we look forward to sharing with you the next quarter. Thank you very much for being here this morning.
This concludes today's conference call. You may now disconnect.