My name is Marilyn Pereira. I am the High Yield Cable and Media Analyst at Bank of America. Today, we are pleased to have with us, from the E.W. Scripps Company, Jason Combs, Chief Financial Officer, as well as Becky Riegelsberger, Senior Vice President, Treasurer, and Tax. Thank you for joining us today. And obviously, you have a presentation to walk through, so we'll leave the floor to you. Thank you.
Thanks, Marilyn. I'm just gonna. Well, I'll skip over the safe harbor. I think everyone's familiar, but if you have any questions about that, you can check with our investor relations person. But I'm gonna jump into some recent business highlights, some Q4 guidance, our capital structure before Jason goes into more detailed information on 2024 upcoming highlights. So just touching on some recent business highlights, we successfully renegotiated 75% of our cable subscribers this year. So we had a nice step-up in rates and then also expanded the number of stations that we've received distribution revenue on. That leaves just 5% next year and then 20% in the following year. And we also recently announced our fourth sports rights deal with the NWSL.
So that came after our WNBA deal, as well as our local broadcast station deals with the Las Vegas Golden Knights and the Arizona Coyotes. And we also announced our restructuring earlier this year, and we're on track to meet those savings of $40 million annualized next year. And then Scripps Networks revenue was down just 8% for the third quarter, which had exceeded guidance due to better connected TV revenue and better direct response revenue. Jumping over to our fourth quarter guidance, local media Q4 revenue is expected to be down low-to-mid double digits year-over-year, and that's because we don't have the benefit of political coming in.
Our local Q4 media expense is expected to be up mid- to single digits due to some upfront sales and marketing related to our sports strategy, as well as some increase in our expenses for newsroom and station operations. For Scripps Networks, our advertising revenue is expected to be down in the 10% range due to that weak advertising upfront that we've been facing this year. Our free cash flow guide for the year is in the $50 million -$60 million range. Flipping over to our capital structure, this is where we were for Q3. We ended at 5.4 total net leverage and 3.9 secured leverage.
So as for our maturities coming up, we did increase our revolver to $585 million in the third quarter of this year. We used that to address our 2024 maturity, our B-1 term loan. Our next maturities coming up are the 2026 term loan, B-2, which is in the back half of 2026. We also have our revolver that matures in the first part of that year. And then our pref shares that we have in place, $600 million with Berkshire Hathaway, that can be called for the first time in January of 2026. So as we look at our maturities for 2024- for 2026, we'll look to address all of those together.
With political revenue coming in next year and free cash flow, our priority still remains is paying down debt with any excess cash that comes in. So we'll look to where we're at at the end of next year. From a structure standpoint, we like to maintain around 50/50 fixed variable, as well as maintain a turn below our secure debt leverage. So we'll look at all of that holistically and where we're at from a structure standpoint as we look to address the maturities. Again, those being the term loan and the revolver, and then what we can consider, but not necessarily saying that we're going to address, is the preferred. A couple of things on the preferred. It's an 8% rate that we pay. We pay that quarterly.
If we were to PIK it, because we get a lot of questions about this, it would go to 9% throughout the duration of the, as it remains outstanding. And while that preferred is in place, we cannot pay dividends or buy back shares. So as we look to whether we want to address that or not, we'll take all of that into consideration. So flipping through the next slide before I hand it off to Jason, just kinda, this highlights, you know, the work that we've done over the last five years, with growing our broadcast stations and, adding on the networks. So we have 109 broadcast stations. Our local media is 63 stations in 41 markets, and we address 25% of US TV households with that reach.
We have 48 ION stations and then 23 affiliate relationships with the other ION stations. We're the largest holder of broadcast spectrum, and we've really done a lot through our connected TV agreements as well, to really be able to address that all-of-the-above strategy to meet the consumer however they're consuming their television or broadcast or connected TV. So with that, I'm gonna hand it over to Jason to dig in a little bit more.
Thanks, Becky. So as Becky referenced earlier, you know, our leverage right now is in an elevated place, and that's really driven by the ongoing, macroeconomic challenges and the impact we're seeing on the ad marketplace as a result. But as we look towards 2024, we expect to see some significant growth in our free cash flow next year, really driven by the five drivers that you see on this page here. You know, this increased cash flow will drive an improvement in our net leverage from the end of this year to the end of next year of a full turn. And, you know, our intention is to use this increased cash flow to pay down debt. That we've been saying it for a while, and it continues to be our number one capital allocation priority.
So why don't we flip to the next slide, and we'll just start walking through and spending a minute on each of these drivers? We'll start here with political. So, you know, political continues to be a significant revenue event for local broadcasters on an every other year basis. And as you see in that top bullet point, the expectation is for $10 billion in television advertising next year, based on a lot of analyst reports that are out there right now. That's an increase versus the last presidential cycle. And local broadcasters are expected to maintain their same share that they have in prior cycles.
You know, I do expect connected TV to gain in share in terms of the total pie during this next cycle, but I expect that to come from other areas of the revenue pie, not from local broadcast. I will just add from a connected TV standpoint, we'll talk about this in a minute, to whatever extent some dollars are shifting to connected TV, we've done some stuff in our Scripps Networks division that I think put us in a good position to go ahead and realize some of those CTV political dollars. In terms of Scripps' specific footprint, a lot still needs to play out in terms of how that $10 billion, you know, what our share of it is.
You know, there is, from a Senate perspective, we've got six markets where we expect really competitive Senate races. From a presidential standpoint, that we have some historically, you know, really swing states, from a presidential election perspective, places like Michigan and Arizona and Nevada, amongst others. I'll also mention that in the past, when we talked about political, it was really a story about local and our local television stations. But in 2022, we did some experimentation on local ad insertion on our ION and our Bounce networks. Both are national networks that historically send one feed out across the entire country. And we did some experimentation and recognized some revenue in 2022 through the local ad insertion in specific markets.
And what that enables us to do is, if political gets hot in a market where Scripps doesn't have a local TV station, historically, that just means we're out of the game there. We potentially can now go into those markets and get a share of the revenue. So I think as you think about 2024, I think you'll see us lean in a little heavier to local ad insertion on our ION and Bounce national brands. Flipping to the next slide, you know, we have a very strong new distribution revenue run rate. Becky kind of alluded to this earlier, but it's a really good free year for us on distribution revenue. We renewed 75% of our pay TV households throughout this year. We were really pleased with the outcome of those negotiations.
End of the day, we have a top line revenue, retrans revenue growth in the mid-teens%, and gross distribution dollars growing by more than 40%. So a good story this year. As you FAST-forward to 2024, you're gonna have the full year impact of those rate step-ups. You'll have another 5% that we have renewing next year, and then we'll talk about this in a little bit as well. You know, every new sports, local sports deal we win opens up an opportunity to go and negotiate incremental retrans revenue for the independent stations that are carrying those sports. And so I think that's another lever that can help drive growth in our both our gross and our net distribution dollars next year.
Our third driver is around free over-the-air TV, and specifically, some of the stuff we're doing with Tablo to support it. So I'll first start and just say, you know, we've been a proponent of driving more over-the-air viewing for a while now. We had a campaign in 2022 that we talked about, put some dollars behind marketing to help, really, for those who are cord cutters or cord nevers, realize that over-the-air TV can be a nice complement to their streaming packages. You know, and so, you know, one of the reasons we do that is because we at Scripps, we have our Scripps Networks division, which is a collection of national brands all available over-the-air. And across the U.S., we take a 26% share in over-the-air viewing.
And that's just for our Scripps Networks brands. If you're in a market where we also have a local television station, our share is gonna be, you know, north of 35%. So that's one of the reasons I think you see us leaning in a little heavier on trying to drive over-the-air viewing than some of our peer set. You know, in support of that. Well, I guess I'll take it one step back. You know, I'll make it clear, we love pay TV, and we don't want to do anything to accelerate pay TV declines or cord cutting. But the reality is, it's happening. And if it's happening, how can we make sure we still can find a way to monetize those eyeballs? Over-the-air is one way.
Connected TV, which I'll talk about in a minute, is another way. So, back to Tablo here. You know, Tablo is a company we bought about a year ago, a small acquisition that makes this set-top box you see here on the screen. And we've spent basically the last year kind of redoing the user interface to make it more user-friendly. So what Tablo is, essentially, it's a set-top box that attaches to an antenna and then pushes the over-the-air signal it's bringing in to whatever TVs you want in your house through Wi-Fi, so you don't need an antenna into each TV. But it also pairs the over-the-air channels that are coming through with a large grouping of free ad-supported streaming channels.
So when you go to the guide, it's, it's, you know, a pretty large collection of both over-the-air and fast channels, creating sort of an integrated TV experience that has the look and feel of a pay TV subscription without the, the pay TV cost. So, specific to Tablo, we see, you know, our Tablo investment here is something that can help drive viewing in the over-the-air space, which we can monetize. We also believe with scale, the fast streaming channels that we have in there can be a whole new revenue stream for us, and, you know, that the platform can drive some nice, incremental revenue there. So, you know, we've talked about it a little bit. We just relaunched it in late August. It's early.
We're pleased with the results so far, and I think during our next earnings call in February, you'll hear us give a little bit more detail in terms of, you know, where we see this particular business going over the next couple of years. Flip, flip to our fourth driver. I alluded to this earlier, connected TV. So, connected TV has been a nice and a growing business for us. And so in 2022, we really started to focus, as you look across the top there, these are all of our national brands, on deploying these brands in the connected TV space. They had not been there before.
And so, as you see all these check marks here, we've been really busy the last, you know, 12-18 months, rolling these out across the major, connected TV platforms, your Tubis, your Roku, so on and so forth. And so it's driving significant top-line revenue growth for us. It's grown into, in a matter of, you know, a year, into a $100 million revenue business with really nice margin. We expect continued growth in Q4 of this year and really nice growth next year as well. So I think we'll continue to lean in this. It goes back to sort of, what I talked about earlier, a bit of an all-of-the-above strategy. We want to continue to monetize pay TV.
We want to for those who choose not to have a pay TV subscription, we want to find ways for them to see our product, whether it's in the Connected TV or the over-the-air space. And then moving to our fifth driver, so, sports. We launched a sports division less than a year ago, probably about 11 months ago, and we've been really busy in that time. We did this with a twofold strategy. On the local side, the focus is using our large footprint of local TV stations to partner with local professional teams to provide distribution for them, especially in light of everything going on in the RSN model. There's a lot of disruption right there, and I think there's a lot of opportunity.
In, on the national side, we have ION, which is our largest national broadcast network that we own, who can provide a solution for league-wide deals, that brings sort of ubiquitous, care or distribution across the country, through over-the-air, through pay TV, and through connected TV. And in the very middle of the page, Becky alluded to this one earlier, you see our most recent national win, the NWSL. So about two weeks ago, we announced, the NWSL deal. We're gonna create a Saturday night franchise, 25 weeks next summer, and for, you know, for a couple of years after that, where we will, we will air a double header every Saturday night of women's soccer on ION.
We're partners in this broadcast package with CBS, with ESPN, and with Amazon, and we're really excited about the opportunity. Because I think end of the day, on both the local deals you see up on here and the national deals, what we really bring to the table is significant improvements in reach and in distribution. We started to share a little bit of color in terms of the upside for Scripps on our last earnings call. We actually talked about the Vegas Golden Knights and the Arizona Coyotes down in the bottom left there, that those two hockey franchises, which we just launched, you know, very recently, are gonna drive a 4% lift in our core revenue in Q4 and a 3% lift in 2024 for the full year.
So when you think of local broadcasters, you think of core revenue. It's been fairly stagnant for a while now, outside of sorta cyclical bumps up and down, tied to the economy. And so, I think what this calls out is the ability for local broadcasters to kinda reshape the profile of their core revenue and drive growth in a place that hasn't had growth in a long time. So it's something we're certainly very excited about. And as we flip to the next slide, it just gives a bit more color in terms of the benefits that we see, both from a Scripps perspective, but also that we believe we're bringing to the leagues and teams we're working with. And we'll start with the WNBA.
So the WNBA, we announced that back in the spring, and this past summer, we had 15 weeks of the Friday night spotlight on ION. And what we saw there is that we were able to drive a significant increase in reach for the WNBA versus their prior TV package. We saw a shift in the demographics of the ION viewer in that night. It was a younger, more diverse viewer than we've historically had. And we were able to bill average unit rates that were at a significant premium to the normal Friday night programming we would have historically had on ION. So very pleased with that. And on the local side, in the middle, you see the Vegas Golden Knights.
So we announced that deal, back in the late spring as well, and we went live in October with this upcoming season. So, what we've seen there and what we've been able to do in a very quick, you know, turnaround, is we've been able to negotiate a pretty significant pay TV package in the market, one that, you know, I think, you know, rivals or exceeds the RSN pay TV package they had previously. From a distribution perspective, we've partnered with the team to launch a direct-to-consumer app. That was something we were very focused on. It's called KnightTime+ . We're really, you know, we've seen, you know, good engagement and signups for that package as well. And we are seeing it's tremendous ratings growth.
And so the Vegas Golden Knights, who, for those who aren't hockey fans, they are the Stanley Cup champions. They're the most successful expansion team in any sport in history, and they already had some of the best ratings in the league. But as you look at what they're getting on KMCC, our local channel, it's a 135% increase versus what they were getting last year, in a year which was a Stanley Cup year. And the Arizona Coyotes, not shown on this page, the increase is even larger on the Arizona Coyotes. And so we are certainly seeing, you know, our thesis of our reach and our distribution, driving larger audience, really play out here. And then on the bottom, you see the Big Sky Conference. So we are the broadcast partner for the Big Sky Conference.
You know, this is a relationship where we see in our footprint, kind of in the Northwest, a real opportunity to drive audience for that league and to drive revenue for Scripps. Just this past two weekends ago, I think, we aired the Montana-Montana State football game. In that region, it drew a 35% share. So, you know, Super Bowl-type numbers. And so, that again has been a very positive story for us. So when you kinda look down this page, I think what you see and, it, you know, is that from our perspective, sports is something that is the most resilient of all the viewing genres that are out there.
It's something we're leaning into, because I think, as you can see on this page, we see benefits from a yielding revenue growth for us, and driving significant audience increases for the leagues and teams who we do business with. That's, that's why we wanted to make sure we include this. We think this is a driver of revenue for us, not just in 2024, but beyond. I think that is the end of our prepared slides. We can open it up now, if there are any specific questions people want to ask. Go ahead.
You know, just given where your current leverage is, you know, right now, I know you have pressure on this a lot. D o you think [audio distortion]
Yeah. So, we have communicated that mid-threes is the right leverage for us, and we still look to that being the right, giving us the right amount of flexibility and agility, whether it be through, acquisitions or, return to shareholders through buybacks or, share buybacks or, dividends. So that's still our goal, to get to that mid-threes, and then that. And then working within that range, to achieve those different, benefits and goals.
[audio distortion] , just thinking about the pressure on the supply, you know, as we head into 2024, your business, what do you think will be several drivers of upside ?
So, in 2020, we were around $250 million. In 2022, we were around $200 million. You know, I think that, you know, I think that, one of the things I talked about was the national side and some of the, the work we've done in local ad insertion there. I think beyond that, that can certainly be an upside for, for us versus 2022 and 2020. I think beyond that, it, there's a lot that still needs to shake out in terms of the competitiveness of races, some of the ballot issues. And so I think that's one of the reasons why, most broadcasters have been sort of reticent to provide a guide yet.
I think you'll hear us as we get into the year, giving a little bit more, you know, context and color and kind of a range. But there's still, frankly, a lot that needs to play out in the political landscape to understand who the candidates are. Yes.
So you mentioned the advertising cycle a lot. So what does this advertising cycle feel like to you? Kind of, everything you've had in the past few years. So we've avoided a recession, or is it against the last two years?
So we.
Feels like a small one.
So I would say we've avoided an economic recession. I would say we've been in an advertising recession since March of last year. And so I and especially in the national advertising marketplace. You know, local. I'll touch on local, then national. Local has certainly hung in there better than national. You know, we've seen it's helped that the chip shortage has kind of been resolved from an automotive perspective. So we've seen five consecutive quarters of growth in automotive. Home improvement has remained strong, and those have helped offset some weakness we've seen in services and in retail. So, you know, local generally has been a better story. National over in the Scripps Network side of the business has struggled more. And that's not just unique to Scripps.
As you look at, you know, the whole national ad marketplace, you know, from our perspective, you know, our national ad advertising is made up of direct response and general market advertising. Direct response is highly tied to the health of the consumer pocketbook. And with, you know, a higher inflationary period, high interest rates, that has impacted direct response significantly, and it's really driven down rate. From a general market perspective, I think just the overall sort of, you know, tough macroeconomic conditions has caused a lot of pullback in budget and in spend. You know, the upfronts, you know, kind of industry-wide, you know, we're down around 10%. You're starting to see that roll into everybody's fourth quarter guidance.
You know, I think there is a view of the national ad rebound being a little slower than any rebound in local. And so we'll be keeping a close eye on all the underlying metrics that we kind of track to kind of gauge when that is. But, you know, I don't think there's a view that it's a rapid snapback, but it's a slower build back.
What is that?
It's not back to the full share, but it's getting closer. Yes. I mean, for Scripps, it historically had been in the kind of low 20% range, got down to 14% or 15%, and is kind of back in that high teens range now.
You know, any thoughts in terms of, you know, possible regulation changes around station TV broadcasters, different thoughts on that?
I guess, my view on that would be that, you know, we certainly would advocate for some changes, but that we're not necessarily holding our breath for those changes being made, anytime soon. So we're just focused on, within the current constraints that are out there, how can we continue to better our business, and move forward? You know, we would, I think similar to all of our other, local media peers, we'd advocate for a change there. We think that we should have the ability to negotiate directly with the virtual MVPDs, you know, no different than we do the traditional MVPDs, 'cause we don't really see a difference, you know, you know, somebody who's got YouTube TV versus, cable or satellite subscription, probably thinks of it pretty much the same way.
And so we think that the current setup often doesn't incent negotiations for those negotiating to do so in our best interest. So we would advocate for it, but, you know, similarly, I think things will be slow to change there. Other questions? Do you have any other questions? So I think we've talked for, you know, a long time about a sort of buy, sell, swap strategy, that we are always looking to improve our portfolio, which could be identifying non-core assets and in transacting on those. We've done that in the past with when we got out of podcasting with Stitcher and with Triton, which was digital audio. As well as, I.
You know, if there are, accretive deals for, for example, second stations in a market on the local side, we would look at that as well. But, you know, all within kind of the framework of where our balance sheet is at today. Okay, great.
Thank you.
Thanks, everybody.