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E.W. Scripps Company (New)(OLD) (SSP) Q3 2019 Earnings Call Transcript

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E.W. Scripps Company (New)(OLD) (NASDAQ: SSP)
Q3 2019 Earnings Call
Nov 8, 2019, 9:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, thank you for standing by and welcome to the Scripps third quarter earnings call. [Operator Instructions]. I'll turn the call now over to Carolyn Micheli Senior Vice President of Corporate Communications and Investor Relations. Please go ahead.

Carolyn Pione Micheli -- Senior Vice President and Corporate Communications and Investor Relations

Thank you. Good morning everyone and thanks for joining us for a discussion of the E.W. Scripps company's third quarter 2019 results. 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. You can visit scripps.com for more information. You also can sign up to receive emails any time we disclose financial information and you can listen to an audio replay of this call there. The link to the replay will be this afternoon and available for a week. We'll hear first this morning from Chief Financial Officer Lisa Knutson; then Local Media President Brian Lawlor; and National Media Executive Vice President Laura Tomlin.

And finally from President and CEO Adam Symson. Also in the room with us today is Controller and Treasurer Doug Lyons. Lisa?

Lisa Ann Knutson -- Executive Vice President and Chief Financial Officer

Good morning everyone. Today we're pleased to once again report quarterly financial results across the company that met or exceeded expectations. During the third quarter we closed on our third television station transactions of the year. On September 19 we completed the purchase of 8 stations being divested by Nexstar and Tribune in their merger. On May 1, we closed on 15 stations from Cordillera and on January 1, we closed on the acquisition of three stations from grey and rain calm. Today I will discuss our financial results as though he had owned all the news stations since January 1 of 2018. And today's press release, you can find the results on both and as reported basis and on an adjusted combined basis. We hope this presentation gives you a clear picture of our growth. Also I wanted to point out that street consensus estimates are not comparable to our third quarter results or fourth quarter guidance. Some analysts have already submitted new estimates incorporating the Nexstar Tribune divestitures and some have not. So consensus reflects a mix of numbers. Now let's talk about our strong third quarter performance. In our Local Media division on an adjusted combined or same-station basis revenue was $305 million or 12% -- a 12% decline from the third quarter of 2018. In last year's third quarter we had about $57 million in political ad revenue on an adjusted combined basis compared to about $5.5 million in 2019.

Core advertising was up nearly 4% on the adjusted combined basis. Retransmission revenue was $109 million. Expenses for local media were flat. Now let's talk about the rest of the company's Q3 results on an as-reported basis. The National Media division delivered strong results for the quarter. The division exceeded our revenue guidance of mid-$90 million coming close to $100 million for the second consecutive quarter. Expenses were in line with expectations. Segment profit for national media came in at $5.3 million down a bit from Q2 as we had expected. Shared services and corporate expenses were about $14 million. For the third quarter the company's loss from continuing operations was about $22 million or $0.27 per share. Pretax cost for the current quarter included about $17 million of acquisition and related integration costs that increased the loss by nearly $13 million net of taxes. That works out to $0.16 per share. Though we would have reported a loss of $0.11 per share if you exclude the impact of noncore items. Our capital expenditures for the third quarter totaled about $11 million including just under $3 million for the FCC repack. We expect to be fully reimbursed by the federal government for our repack costs. Turning to capital allocation the company made about $4 million in dividend payments in the third quarter and $12 million year-to-date. No shares were repurchased during the quarter.

We expect to stay out of the market while we focus on paying down debt. On September 30 cash totaled $87 million while total debt was $1.98 billion. Next year we expect to benefit from our newly expanded national footprint to capture even more political advertising dollars and more value from the contractual reset of about half of our pay-TV subscribed households. And a reminder those contract resets come after the Comcast household reset on January 1. Because of the actions we've taken over the last two years, we've significantly improved the cash flow profile of the company. And we previously stated we expect 2020 company free cash flow to fall in the range of 225 to 250 million dollars. With that level of cash flow over the next 12 months we expect to deliver to the low to mid fours. Now I'd like to touch on some highlights of our fourth quarter guidance. In today's press release we provided local media revenue and expense and retransmission guidance on an adjusted combined basis. The 8 Nexstar Tribune stations are now included in all periods along with Raycom and Cordillera stations. We released tables giving the adjusted combined historical results as a part of our press release on September 19. For the fourth quarter we expect Local Media revenue to be down in the low 20% range in comparison to Q4 of 2018.

That's because our fourth quarter 2018 political ad revenue was $114 million on an adjusted combined basis. Fourth quarter Local Media expense is expected to be down mid-single digits. Just a reminder that in Q4 last year we had a $9 million programming impairment charge and also some onetime costs. We expect retransmission revenue to be up in the low single-digit range over our adjusted combined results for Q4 of '18. We have no significant contract renewals or steps up in 2019. We expect National Media revenues of between $100 million and $105 million and expenses in the high $90 million range. Expenses include the investment we're making this year in Court TV to grow its distributed to 90% of U.S. TV households. We're expecting the shared services and corporate line to come in at about $14 million again this quarter. And now here's Brian to discuss our local media results.

Brian G. Lawlor -- President of Local Media

Thanks Lisa. Good morning everybody. Here at Scripps we're winding down on a really busy year. We've acquired and now are on-boarding 27 new TV stations including 7 former Tribune stations and 1 former Nexstar station that officially joined us on September 19. Having grown from 9 stations to 60 in the last 10 years we've gotten pretty good at integrating television stations. A key element of our onboarding is sharing with our new employees the scripts cultural values our mission of producing meaningful storytelling and our expectations for high professional performance. In addition to the cultural onboarding our integration process includes capturing the greatest possible efficiencies and synergies from our acquisitions. We're quickly moving our new stations to our many centralized systems. These include graphics master control and ad trafficking. Today is the fourth largest independent broadcaster we've created a company with authentic local connections combined with broad national reach. We've captured cost efficiencies that also free up our local teams to focus on reporting the news and providing an objective platform for local businesses. As a result of our growth Scripps is a stronger more durable and more efficient local broadcaster.

Now I'd like to turn to our core advertising business. During the third quarter 7 of our 8 largest ad categories grew on a same-station basis. Among them services retail home improvement and communications all showed nice year-to-year growth. Specifically the Home Improvement category continues to be especially strong. All of these categories reflect the health of our local economies and that consumers are spending in our local markets. It's also good to see retail performing well as we move into the holiday season. We are pleased the third quarters category strength has continued into the fourth quarter. October finished as one of our strongest ad sales months of the year. Our political advertising revenue was very strong for an off-cycle election year. Our newly acquired stations put us in Kentucky and Louisiana where we just saw competitive governor's races. And we now have 2 stations in Virginia which benefited from very active state races. So we now have a steady stream of odd year political revenue. By election day this week we had brought in more than $11 million of political advertising for the first 5 weeks of the fourth quarter. That puts us at more than $20 million of political ad revenue this year on a pro forma basis.

Finally I'd like to discuss our Katz multicast business which reports to me and appears in the national media segment financials. In October Katz cates launched Court TV on the former Tribune stations and as a result of that additional distribution the network now reaches 90% of U.S. households over the air and 40% of all cable homes as well as global audiences on over-the-top platforms. And the docket at Court TV is looking compelling. We've got the high-profile trials of Harvey Weinstein and R. Kelly just around the corner. At the same time Court is producing original programming including an extensive 37-week series about the O. J. Simpson trial. We expect Court TV programming to continue to draw big audiences to our nearest cates network. And now here's Laura.

Laura Tomlin -- Senior Vice President, of National Media

Thanks Brian. Good morning everyone. I'd like to start by echoing Brian's enthusiasm for the warm audience reception and rapid distribution growth of Court TV. Our businesses across the company have come together to support the Court TV launch. Our local TV stations and Newsy have provided ad inventory for promos of Court TV program -- programming WPIX in New York interviewed anchors Vinnie Politan and Simair . We helped Court TV launch a podcast and we promoted Court TV on NASDAQ'S times square billboard. From a marketing and content perspective Scripps is tapping into time talent and media assets across the local and national media businesses to support Court TV. And we are using the same technique to raise the profile of our other brands as well. This is yet one more advantage of our platform as a larger and stronger media company. Turning to our third quarter results the National Media division again neared $100 million in revenue.

That performance includes nearly 20% revenue growth at Katz 40% growth at Stitcher and 75% growth at Newsy. As we look to the fourth quarter we see Stitcher and Newsy moderating a bit as they come up against some tough comps from the fourth quarter of last year. You can continue to look for strong double-digit growth rates from these fast-growing businesses. At Stitcher we just launched a hit podcast that went straight to the top of the chart Office Lady. The show debuted in mid-October featuring 2 stars of the hit Sitcom The Office Jenna Fischer and Angela Kinsey. The 2 real-life best friends dissect the TV show one episode at a time and as you would expect with great humor. Office Ladies' first episode has already had nearly 2 million downloads. A new generation is watching classic TV shows such as The Office and they're big podcast listeners too. This is another great example of why Scripps is investing in businesses that cater to changing media consumer habits. Also at Stitcher we've been seeing success with our shows; Conan O'Brien Needs a Friend; and Getting Curious hosted by Jonathan Van Ness of the Netflix hit Queer Eye. Stitcher just announced this week the launch of a third scripted drama series with Marvel New Media. It's called Marvel and it's based on the popular 4-part comic book. Finally the new HBO Max OTT Service will create a television documentary version of Stitcher's popular podcast Heaven's Gate about the California-based cult who's members committed mass suicide in 1997. These high-profile shows and partnerships drive new listeners and advertisers into the expanding podcast marketplace. Stitcher is well positioned to capitalize on this growth because of its ad sales network its owned-and-operated shows and its listener relationships to the Stitcher podcast app. At Triton our digital audio B2B business we continue to benefit from the move of terrestrial radio companies onto digital platforms.

Triton provides these companies with infrastructure services to convert their over-the-air broadcast into digital streams. And now Triton is able to offer these companies an end-to-end podcasting solution as well. It's a natural extension of our current services and Triton is also now powering Stitcher's technology platform. Finally I'd like to discuss a number of recent wins for our national news network needs. Newsy's profile continues to rise as it produces impactful investigations and major documentaries. The teams at Newsy and our Washington Bureau have dug into issues this year including police misclassification of rape investigation; the mishandling of sexual assault cases on Native American land authorities' inconsistent use of The theme is fire alert system and the impact of climate change. Newsy has won 14 national journalism awards for its work this year. In addition it was recently identified as the most reliable and neutral cable news network and a recent media bias chart study. Newsy's objective facts-based approach and landscape of right- or left-oriented media outlets has been well received by audiences.

And as the audience grows so does the revenue particularly in the over-the-top market where younger news consumers turn for their information and entertainment. Now here's Adam.

Adam P. Symson -- President & Chief Executive Officer

Thanks Laura and good morning everybody. This morning's announcement of Scripps' third quarter results marks the eighth consecutive reporting period in the last two years when we have met or exceeded expectations on key financial measures. Improving our short-term operating performance has been a top priority for this management team and I'm pleased to see our terrific progress. In September we wrapped up a busy M&A year when we closed on our Nexstar Tribune divestiture stations. We are now repositioned to thrive in a consolidated media landscape. Our acquisition activity significantly improved Scripps' reach and our operating profile with 60 stations reaching 1 in 3 American households. We've gained depth and scale. We now own more #1 and #2 stations and have added second stations in some of our key legacy Scripps markets. So today we're not only bigger but we're better. Our station group is more durable better-performing and will provide our shareholders with an excellent return on invested capital. Our broadcast business provides a firm financial foundation for the enterprise. From this solid base we'll capitalize on future upside in that business including through the growth of automated advertising and the emergence of new business models around next-generation TV or ATSC 3.0 that are still to come. And at the very same time we're setting up this company to significantly profit from the new ways that people are consuming media. This approach is both a hedge and a growth strategy as we make modest short-term investments that we are confident will generate significant long-term value. Our 4 major national businesses Katz Newsy Stitcher and Triton are in fast-growing media marketplaces of over-the-air and over-the-top television and digital audio and podcasting. Our National division is rapidly grow new expanding its margins and creating brand-new shareholder value.

To conclude in the short term we'll ring in the new year with the reset of our Comcast households delivering an immediate boost to our bottom line and then we'll work to capture the full distribution value for our local brands as we reset another half of our pay-TV households. We'll integrate our new stations and maximize the opportunity for financial synergies. We'll serve our audiences across the nation with election year reporting that informs our democratic process and is consistent with Scripps' commitment to quality objective and trustworthy journalism across all of our news outlets. And throughout the year we'll use our higher free cash flow yield to pay down debt as we move scripts back to our historical leverage ratios. This is the growth plan we laid out to you two years ago and this is the plan we continue to execute. And now operator we're ready for questions.

Questions and Answers:

Operator

[Operator Instructions] We've got the line of Dan Kurnos with Benchmark. please go ahead.

Daniel Louis Kurnos -- The Benchmark Company -- Analyst

Thanks. Good morning. Nice progress. Adam just kind of start with high-level picture here. You talked about the consolidated landscape. It sounds like we've come to sort of a bit of a standstill. Most of the big assets have been picked up here. I know you guys are working rapidly toward delever. I'm just curious what you're seeing that's still out there? How -- do you guys have any dry powder to go after it? And a lot of other guys are focusing more on return of cash as well. So just kind of a high-level picture on if you think there's further consolidation opportunities or everyone is kind of biding time until we get to next year? And then I guess maybe for Brian just on political it's been massive so far guys have been reluctant to talk about '20 given what happened in '16 but everybody's kind of inching up to new record levels. I know you guys have some interesting comps versus '18. So just maybe some updated thoughts there?

Adam P. Symson -- President & Chief Executive Officer

Thanks Dan. As we've said before right now our top priority for capital is for us to use that free cash flow to pay down debt and delever. I think the timing is actually ideal for us. I think it's unlikely we'll see significant local television M&A occur before the election. And so we'll use that time period that we have in 2020 both with the Comcast step-ups and the reset of our additional retrans rates along with the political cycle to pay down debt. And then we'll address the opportunities as they come much further down the line once we're back to levels of -- a debt level that we're more comfortable with. Brian?

Brian G. Lawlor -- President of Local Media

Dan it's Brian. Obviously we feel really good about where we're at in 2019 the political and what it's telling us about next year. Just this week we wrapped up the state seats in Virginia. We did 3x as much political advertising on our 2 stations in Virginia as we did in 2015. And then Louisiana where there's still got another 7 days on the runoff for the Governor there we're already 100% greater than we were in 2015. And then in the Kentucky Governor race we're up over 60%. So I mean just massive growth in these key markets. And I think they're really telling. So obviously we're very optimistic about next year. We think that there'll be more money in the ecosystem than there has ever been. And I think our footprint is excellent. I mean as we're looking at presidential we like Indecipherable our footprint a lot in Florida Michigan Arizona Colorado Wisconsin Nevada. In many of those markets we own -- in many of those states we own 2 or 3 stations. In Florida we own 5. We've got 3 senate races that right now of the 6 better-considered tossups we have 3 of them Arizona Colorado and Michigan. Each of those markets -- each of those states we have more than 1 market that we're doing business in. We have an open Montana gubernatorial seat. And then I don't know there's something like 46 congressional races that are considered tossups right now. We're in like 21 of them. So I think everything is lining up real nicely for us to have a heck of a year next year.

Daniel Louis Kurnos -- The Benchmark Company -- Analyst

Got it. Thanks, guys.

Brian G. Lawlor -- President of Local Media

Thanks, Dan.

Operator

Next question is from Steven Cahall with Wells Fargo. Please go ahead.

Steven Lee Cahall -- Wells Fargo Securities LLC -- Analyst

Yeah, thanks,Adam I was wondering if you could maybe give us a little bit of an outline for what retrans revenue looks like next year. I think maybe the market's a little focused on your Q4 guide right now and you've got this massive step up. It does kind of leave a lot of room for interpretation after all the M&A. So could you help us maybe just benchmark a little bit of what that pro forma revenue growth is going to look like in '20?

Adam P. Symson -- President & Chief Executive Officer

Yes. So on January 1 we'll finally receive that Comcast step up. We're obviously looking forward to that. And we think there'll be a very nice flow through on that. After that we have another 50% of our subs that will come up and be negotiated through the year. And so we expect as I said in the prepared remarks to be able to receive the full value of our distribution of our local brands with those MVPDs. So we think it's going to be a terrific year from a retrans perspective. Brian?

Brian G. Lawlor -- President of Local Media

Steven it's Brian. I just wanted to jump in. I think in the last couple of quarters we talked about a little bit of a retrans dissynergy on our acquisition of the Tribune and Nexstar. And really this year a lot of that has to do with the fact that prior to this year we owned 1 CW station. And so in our retrans negotiations we clearly traded a little bit of that value away to maximize the value of our big 4s. But now at the end of this year we own 13 CW stations. So our current market rate for CWs is below market and that would account for most of the dissynergies. But as Adam just said we're about to get into 50% of our subs pretty quickly and I think we'll be able to recapture that value. And so we do look at those dissynergies as really short term.

Adam P. Symson -- President & Chief Executive Officer

Yes I would just add just to sort of round this out. The Scripps retrans trajectory is obviously very different than our peers. We've been waiting like we've said for years for the step-up of the Comcast households and then we've got the additional opportunity. So we expect retrans to have significant upside for us as we look forward.

Steven Lee Cahall -- Wells Fargo Securities LLC -- Analyst

Great. And then maybe just on the national side a couple of questions there. Maybe first in the audio space you've seen good growth there with Triton and Stitcher. It seems like we're seeing some really rich multiples paid for podcasting assets. So how do you think about the scale that you could be in this business versus potentially parting with some assets at some really strong multiples? And then on Court TV is most of the advertising on that currently direct response? And do you think there is scope to expand that as the programming increases? Maybe to more industry verticals or getting Nielsen rated to improve those CPMs?

Adam P. Symson -- President & Chief Executive Officer

Stephen it's Adam. So let me take the second question first. Yes because we just launched Core TV earlier this year today most of that advertising is direct response. Now that we are available in about 90% of U.S. households and are Nielsen rated where we'll be moving next year toward the brand advertising we expect. But it's going to follow the same trajectory that all of our multicast brands have mostly direct response in the beginning and then the slow transition to the -- from direct response to hybrid direct response and in general market advertising. On your question about the digital audio space. We're really pleased with the progress the market's making. The marketplace and digital audio obviously growing quickly as consumer habits change specifically podcasting as well. We expect podcasting to be a $1 billion marketplace probably within the next year or 2. Obviously we've seen the same numbers you are and that's why we've been so bullish on the opportunity for Scripps in this space. We'll continue to look at all opportunities as they present themselves in the digital audio space and take the marketplace's development as it comes.

Steven Lee Cahall -- Wells Fargo Securities LLC -- Analyst

Thank you.

Operator

Next we'll go to Kyle Evans with Stephens. please go ahead.

Kyle William Evans -- Stephens Inc. Research -- Analyst

Thanks. Good morning.I wanted to kind of double back to get a little bit finer point on 2 questions that were asked by Dan. Adam you mentioned that there was a comfort level that you could get to on leverage before you'd start thinking about kind of a different capital allocation than just deleverage. Could you put some brackets around what that leverage level is? And then I've got some follow-ups.

Adam P. Symson -- President & Chief Executive Officer

Yes. So let me speak broadly. As most of you know Scripps has historically been around 3 3.5 and that's where we've sort of always seen our sweet spot. Relative to when we would restart a stock buyback program or change sort of our view Lisa you want to talk a little bit about that?

Lisa Ann Knutson -- Executive Vice President and Chief Financial Officer

Yes. Kyle we've said in the next 12 months we would be somewhere between the mid and low 4s. I think we would look at restarting a stock buyback once we were in -- the number would start with 3. So that's our priority over the next -- 12 to 18 months is to really -- to get that debt down below 4 and then restart our -- really take a balanced approach to our capital allocation strategy.

Kyle William Evans -- Stephens Inc. Research -- Analyst

Great. Brian you talked a little bit about state-by-state cycle trends. You guys had a very very strong 2018. I guess just looking at the pro forma 2018 numbers and wondering if you think we're flat to up from there in 2020? And then also along the lines of the strong second half '18 political any way for us to think clearly about the reverse displacement you're going to get this year? Or is that just kind of lost in the numbers?

Steven Lee Cahall -- Wells Fargo Securities LLC -- Analyst

Yes. I think it's going to get lost in the numbers. Again I think I talked about the 3 states 4 markets where we really had some displacement that would have happened mostly in 4- or 5-week period. And I think we'll be able to make up most of that. So I think it's mostly upside as we're thinking about 2019. As we look out to 2020 you referenced a pro forma number in 2018 somewhere around $196 million. So we haven't yet finished putting pen -- the pencil on this but we clearly see upside from that. But look a lot is going to depend on how quickly the Democrats can kind of narrow their field. The sooner they can get to 1 candidate the more revenue upside opportunity we have. If the Democrats drag out to the primary to June or the convention we have a short window for the upside on that. But in a perfect scenario candidates would be secured in a nomination in March or early April. And then once those 2 candidates for each side are determined then that starts the active spending. So I think we'll be watching that early period very well. But clearly based on the health of the ecosystem and our footprint I would expect a positive number beyond the historical 18 pro forma.

Kyle William Evans -- Stephens Inc. Research -- Analyst

Great. Brian while I have you could you comment on sub cap trans and retrans in 3D on a pro forma basis? And kind of what you're factoring into your outlook? We had -- some of your peers seem to get caught in the satellite blackout crossfire. I was just wondering what you've seen there?

Adam P. Symson -- President & Chief Executive Officer

Kyle it's Adam. I'm going to take this one. Our pay-TV households were down just a bit from the last reporting period ending in June. And most of that sub decline I think as you described came from the satellite providers. So I was actually pretty encouraged by this week's Dish sub count report that went through September. We're obviously also still seeing growth in the virtual MVPD households. So that's sort of where we see it. We think we're sort of at a point in time right now.

Kyle William Evans -- Stephens Inc. Research -- Analyst

Got it. Lastly Laura just an update on newsy kind of where you're getting your best engagement with consumers what you think -- if there are any constraints there whether or not they're on the supply or the demand side? And kind of how you envision direct sales versus more open auction sales in the future?

Laura Tomlin -- Senior Vice President, of National Media

Yes. Right now I'd say most of the sort of the both the audience and revenue growth is still really driven by OTT. You can see we've been really pleased with the year-over-year growth rate at 75%. Newsy continues to deliver a great product to younger consumers on the OTT platform. We're seeing some small growth in cable. I think we remind ourselves that you can't just turn on a cable network overnight and expect it to grow instantly. So this is a marathon not a sprint. And I expect that we'll see more cable ad revenue in 2020. And there's still a lot of demand on OTT. I think I've mentioned in the past we're typically sold out rarely if we're not sold out.

Kyle William Evans -- Stephens Inc. Research -- Analyst

Great. And lastly congrats on promotions over there.

Laura Tomlin -- Senior Vice President, of National Media

Thanks.

Kyle William Evans -- Stephens Inc. Research -- Analyst

Thanks.

Operator

Our next question is from Marci Ryvicker with Wolf Research.

Marci Lynn Walner Ryvicker -- Wolfe Research -- Analyst

Thanks, mate, You probably posted the best core of your peers up almost 4%. And so Brian how should we think about going into the fourth quarter should that accelerate based on your comments on October? And then secondly Adam can you just clarify the free cash flow comments that you made? It sounds like there could be upside to free cash flow. When you say we expect Scripps to generate significantly higher free cash flow in 2020 than we otherwise would have expected in the press release.

Brian G. Lawlor -- President of Local Media

Marci it's Brian. Thanks for the complement on Core. We're really proud of the efforts of our sellers and as we talked about what 7 of our 8 largest categories were up. And I think as I said in the prepared comments I think we're just really pleased that the categories that speak to people in local markets having money and disposable income to spend on furniture on bedding on travel and leisure on travel and cruises and things like that. I mean all these subcategories are up significantly jewelry shoes appliances up double digits everywhere. It really gives us a lot of hope that our local economy and our local markets are very healthy and they're spending money and we're taking advantage of that and with a strong new business effort. I think it's showing in our numbers. I did say in my prepared remarks October was outstanding. Obviously our go against because of political it's not surprising but it was better than we expected and November is very strong as well. So I think we feel really good about fourth quarter right now.

Adam P. Symson -- President & Chief Executive Officer

So we reiterated our view on free cash flow for next year. But as you pointed out with a strong political year next year there could be that upside for additional free cash flow.

Marci Lynn Walner Ryvicker -- Wolfe Research -- Analyst

Thank you.

Operator

Thank you, Our next question from Michael Kupinski with Noble Cap markets.

Michael A. Kupinski -- NOBLE Capital Markets -- Analyst

Congratulations on the quarter and congratulations on the promotions. First I'd like to talk a little bit about Katz. The revenues were a little softer than I expected especially due to the launch of Court TV and it kind of showed a little deceleration from earlier in the year. And I was wondering if you can give us a little color on the revenues for the quarter? Should we anticipate there will be an acceleration of the rate of growth coming -- in the coming quarters because of Court TV just kind of -- and of course because of the high-profile court things that we're starting to see here? But could you just give us a little color there?

Lisa Ann Knutson -- Executive Vice President and Chief Financial Officer

Yes. So Mike this is Lisa. I'll jump in and then I think Brian will add some color. I don't think we've seen a deceleration. Consistently we've seen growth in the 18% 20% for third quarter it was 19%. So 3 consistent growth rates throughout 2019. Brian I don't know if you want to -- just a little bit of...

Brian G. Lawlor -- President of Local Media

Yes. Mike obviously you know we launched on May 8 we had 63% country when we launched and so are just beginning to get the brand out there to the earlier question by Steven. It's -- we're laying in direct response just -- it's a brand-new network no numbers when you start-up. So I think Court TV is building toward what we expect it to be. I think we expected a slow crawl in terms of the revenue but I think about every week the revenue continues to grow with the addition of the other 30% of the country this week. We saw a big jump up. And more importantly we got a lot of positive feedback from our DR clients that their phone take rates had significantly picked up. So we feel really good about work. As Lisa said almost 20% growth for the business with Court really not contributing much at all to that so that speaks to the strength of Bounce and Laff and Grit. They're really strong right now with a lot of double-digit momentum. And as Court gets its -- gets up to pace I think you're going to see the benefit of it as we get into the middle of next year.

Michael A. Kupinski -- NOBLE Capital Markets -- Analyst

Got you. And Brian since I was wondering if you're following up on Marci's question on Court. Have you noticed any particular differences between some of your smaller markets and your larger markets? A number of broadcasters have indicated that national advertising seems to be pretty strong with the exception of auto. Can you just give us a little added color on core at this point?

Brian G. Lawlor -- President of Local Media

We had a good year on National also. And we saw a lot of stability in the category some growth in different places. Local has clearly been our strength. We were up mid-single digits inside the quarter on the local side. But I think the good news is our large markets are healthy. Some of our biggest spot growth that we saw in the audits double-digit growth in markets like Tampa and Kansas City and Las Vegas. And so the big markets are very healthy. But I think the -- our -- many of our small markets are pretty healthy as well it's just there's a smaller opportunity there.

Michael A. Kupinski -- NOBLE Capital Markets -- Analyst

Got you. And then on Newsy I want to go back to that. Can you talk about the number of cable subs that it currently has has that increased over the quarter? And then is it getting the ratings that you were expecting on cable? And can you talk about the prospect of adding more coverage on cable?

Laura Tomlin -- Senior Vice President, of National Media

Mike it's Laura. We are hovering right around 40 million pay-TV subscribers right now. Over the last quarter I think we've added a few virtual MVPD side. As it relates to ratings on cable we currently use a host of data to inform our content strategies. And we just recently became rated so it's really early. And I did mention a little bit earlier. It's a marathon not a sprint. We're going to take time for folks to find Newsy and our channel guides but we've seen great demand for the product that Newsy is putting out there being objective and authentic and we expect that the subscribers on cable will follow suit like our OTT audience has.

Michael A. Kupinski -- NOBLE Capital Markets -- Analyst

Gotcha, thank, you so much. Appreciate it.

Operator

Our next question is from Craig Huber with Human Research Partners.

Craig Anthony Huber -- Research Partners LLC -- Analyst

Yes, good morning. Thank you.A few questions. Maybe I'll start on the TV side. Brian can you talk a little bit about auto a little bit further what you're seeing there post the anniversary of the election a year ago? I mean how is it looking in your mind for November and December?

Brian G. Lawlor -- President of Local Media

Yes. Craig it's Brian. Look I thought we had a pretty decent quarter in terms of automotive. In the third quarter it was down low-single digits. So as you know that's kind of the best performance we've had in a while. Inside of auto. I think that's where we saw some excitement. Our domestic dealer groups were up double digit. Foreign dealer groups were about flat. We were able to grow our individual dealers mid-single digits. We had a couple of the big brands that were up across all of their brands. So I think if it looked good. Obviously October with the displacement last year auto is up significantly and we like the way it's tracking for the rest of the quarter.

Craig Anthony Huber -- Research Partners LLC -- Analyst

Your sense though Brian to say the second half of November and December can be up for auto? Or is that too ambitious?

Brian G. Lawlor -- President of Local Media

I don't think it's too ambitious but it is too early for me to have a some conviction on that comment. I think auto definitely for December gets laid in with year-end closeouts and some new models and deals to finish the year and capture market share. So it's very typical for auto to build through the fourth quarter. And I would expect that to be a case. The good news was -- I think we're all nervous about the strike the general owner strike and that had no impact on us. There were virtually no cancellations or no pullbacks as a result of that they were able to get it resolved before meaningfully elected the local dealers.

Craig Anthony Huber -- Research Partners LLC -- Analyst

Then you mentioned the retail category which as Brian has not been strong some parts of the last 2 years say what do you make it that right now is that the strength of local economies you're talking about? I mean given all the store closures and bankruptcies out there. It's interesting your numbers are doing well there.

Brian G. Lawlor -- President of Local Media

Yes they're doing really well. By far the best -- the best quarter we've seen in a long time for retail just because of the depth of it. Sometimes it can be driven by a singular subcategory but furniture was up medicine was up bedding was up appliances were up jewelry stores pet. I mean retail had a really good quarter and perhaps the strongest of that -- and the biggest subset of that is furniture which was up almost double digits. We had a really good retail quarter which gives us a lot of optimism as we head toward the holiday season.

Craig Anthony Huber -- Research Partners LLC -- Analyst

I want to ask you Brian on the retrans subs. So I think Adam said it was down slightly. So I take that down about 1% the latest. What sort of numbers you have there?

Brian G. Lawlor -- President of Local Media

We were down about 2% Craig.

Lisa Ann Knutson -- Executive Vice President and Chief Financial Officer

Yes.

Craig Anthony Huber -- Research Partners LLC -- Analyst

Down 2. Okay. And then also all the TV acquisitions you've closed on here recently Brian. Just curious the number of slots you can put in there for extra news cast at those acquisitions? Is there much availability to just put in more news hours there over the course of the week?

Brian G. Lawlor -- President of Local Media

There is. I think obviously a couple of the stations -- so if I include Cordillera a bunch of the stations are big for us. And I think that maybe some expansion into weekend and maybe some expansion on some of the CWs there. But I think as I look at the Tribune I think there's quite a bit of opportunity especially because of the large markets of New York Miami Phoenix are all CWs and we do see an opportunity for news expansion in all of those markets.

Adam P. Symson -- President & Chief Executive Officer

I would just add Craig that the expansion of news for us remains an opportunity for us to continue to serve out our journalistic mission. And obviously ahead of the election maximize our yield for those markets.

Craig Anthony Huber -- Research Partners LLC -- Analyst

And I think my last TV question. You touched on this I just want to get better clarity. I mean the retrans revenue number in the quarter I guess the outlook for the fourth quarter you're saying part of it's being hurt by dissynergies. Maybe you could just touch on that a little bit further? I also understand that you had about 3 million retrans subs that come up for renewal at midyear. So obviously sequentially versus the retrans somebody had in the second quarter on a pro forma basis should have been up on that but obviously offset you're saying by this dissynergy stuff. So can you just talk a little further on that again?

Lisa Ann Knutson -- Executive Vice President and Chief Financial Officer

Yes. Craig I would point you back to our release back in September '19 when we closed on the Tribune Nexstar divestitures. We gave full pro forma numbers as if we had to owned those stations back to 2000 -- beginning of 2018. So you'll be able to sort of dig into those numbers there.

Craig Anthony Huber -- Research Partners LLC -- Analyst

Right. Right. But looking at that it looked -- I'm looking at those right now. It looked like you had $112 million in the June quarter for retrans $113.5 million called in the March quarter. I guess you reported $109 million in the September quarter.

Lisa Ann Knutson -- Executive Vice President and Chief Financial Officer

Yes. And I think Brian mentioned a few moments back the CWs. So really most of the dissynergies were associated with the CWs that we'll renegotiate next year.

Adam P. Symson -- President & Chief Executive Officer

Yes. I think Craig there's just a bunch of moving parts in that. Obviously we did have some sub that came up and we had some step-ups inside of that. But beyond that we did have the CW dissynergies that I explained a little bit earlier and we have had some sub declines. So I think the dissynergies and the sub decline sort of offset the step ups. But those were really not meaningful relative to what we're about to get with the Comcast step-up at the end of the year. And then the first half of the year and nearly 50% of our subs next year. So I think there were some moving parts in the back half of this year that kind of to some degree canceled each other out but I think there's a lot of upside as we look to 2020.

Craig Anthony Huber -- Research Partners LLC -- Analyst

Actually I do have one more TV question I'm sorry. The 2016 pro forma political number do you have that number handy?

Brian G. Lawlor -- President of Local Media

$134 million.

Craig Anthony Huber -- Research Partners LLC -- Analyst

Okay. And then how did Triton do -- that's my last question. How did Triton do on a pro forma basis year-over-year place for revenues?

Lisa Ann Knutson -- Executive Vice President and Chief Financial Officer

Triton's growth is in line with our expectations. We did earlier this year sell a noncore asset. So we will see the impact on Triton's revenue growth for a few quarters. But outside of that they're really in line with our expectations. And that decision to sell the noncore asset gives the team really the ability to focus on the 2 core revenue streams of infrastructure measurement.

Craig Anthony Huber -- Research Partners LLC -- Analyst

That mean that underlying is up about 10% or so?

Lisa Ann Knutson -- Executive Vice President and Chief Financial Officer

Yes. Yes I think it's low teens.

Craig Anthony Huber -- Research Partners LLC -- Analyst

Thank you very much.

Operator

[Operator Instructions] Next we'll que Davis Hebert with Wells Fargo. Please go ahead.

Davis Hebert -- Wells Fargo Securities -- Analyst

Just a couple of quick ones for me. I appreciate the comments on the leverage trajectory. If you could just give -- given all the moving parts the LAQ leverage as of 9.30?

Lisa Ann Knutson -- Executive Vice President and Chief Financial Officer

Yes. That would be 5.2.

Davis Hebert -- Wells Fargo Securities -- Analyst

And that includes or excludes Comcast?

Lisa Ann Knutson -- Executive Vice President and Chief Financial Officer

That is our adjusted pro forma so it includes Comcast.

Davis Hebert -- Wells Fargo Securities -- Analyst

Okay. And then last question kind of alluding to Steve's earlier question on podcast valuations. There's been a couple of other transactions I guess in your National Media space. Cheddar was sold to Altice and then TEGNA bought Justice and Quest. How do you think that translates to valuations for Katz and Newsy respectively?

Brian G. Lawlor -- President of Local Media

I think both of them are strong affirmations of the value we're building for shareholders. I mean for a long time both at Newsy at Katz and as well in the podcasting business first Midroll and now with the name Stitcher we've talked about our modest investments to create shareholder value in these marketplaces and we believe we're doing exactly that. Obviously this company has a long history of creating and then unleashing shareholder value oftentimes through transactions. But at this moment we're totally focused on organically growing those business -- businesses and yielding the value within the company.

Operator

And with no further questions I'll turn it back to the company for any closing comments.

Lisa Ann Knutson -- Executive Vice President and Chief Financial Officer

Thank you. Thanks everyone for joining us today.

Operator

[Operator Closing Remarks].

Duration: 46 minutes

Call participants:

Carolyn Pione Micheli -- Senior Vice President and Corporate Communications and Investor Relations

Lisa Ann Knutson -- Executive Vice President and Chief Financial Officer

Brian G. Lawlor -- President of Local Media

Laura Tomlin -- Senior Vice President, of National Media

Adam P. Symson -- President & Chief Executive Officer

Daniel Louis Kurnos -- The Benchmark Company -- Analyst

Steven Lee Cahall -- Wells Fargo Securities LLC -- Analyst

Kyle William Evans -- Stephens Inc. Research -- Analyst

Marci Lynn Walner Ryvicker -- Wolfe Research -- Analyst

Michael A. Kupinski -- NOBLE Capital Markets -- Analyst

Craig Anthony Huber -- Research Partners LLC -- Analyst

Davis Hebert -- Wells Fargo Securities -- Analyst

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