B+
Overall grade
B
Financial quality
The sleeper story is management setting a 20%+ M&A accretion hurdle - they're essentially saying deals must beat their stock buyback yield, which signals both confidence in deregulation and discipline on pricing. While everyone focuses on the political revenue cliff, the real issue is distribution revenue growth collapsing to 0.1% despite contractual rate escalators, meaning subscriber losses are accelerating. The binding constraint isn't advertising recovery or CW profitability - it's whether cord-cutting stabilizes before their next major distribution renewal cycle hits in Q4 2025. Perry's confidence on deregulation is infectious: 'The prospect of meaningful broadcast ownership reform has never been better than it is today.' My view changes if they announce an M&A deal before formal FCC rule changes, which would signal they have private assurances on timing.
The 30-second version
- M&A machine revving up: Management now says 'accretive acquisitions will have to be more accretive than buying back our stock' - setting a 20%+ hurdle rate
- Distribution revenue machine sputtering: 'Relatively flat' 2025 guidance masks real subscriber bleeding underneath
- CW losses ballooned in Q1 but they buried the number: 'Mid-teens million' increase in losses YoY
What changed this quarter
| Metric | Prior | This quarter |
|---|---|---|
| Net Revenue | $1,280M (up 14% YoY in Q4 '24) | $1,230M (down 3.9% YoY) |
| Distribution Revenue | $714M (up 1.4% YoY in Q4 '24) | $762M (up 0.1% YoY) |
| Advertising Revenue | $758M (up 29.6% YoY in Q4 '24) | $460M (down 10.2% YoY) |
| Non-Political Advertising | Down $51M or 9% YoY in Q4 '24 | Down $20M or 4.2% YoY |
| Adjusted EBITDA | $628M (42.2% margin) in Q4 '24 | $381M (30.9% margin) |
| Adjusted Free Cash Flow | $411M in Q4 '24 | $348M |
| CW Programming Amortization | $87M in Q4 '23 | $88M |
| Net Leverage | 2.91x at year-end 2024 | 2.93x |
Accountability tracked
8 new promises made4 narrative shifts flagged6 prior promises graded
Inside the full report
The complete write-up covers the full promise ledger with kept/missed calls, disclosure-quality scoring, the metrics-vanished check, verification items, and the questions to ask next quarter.
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