Tribune Media's (TRCO) CEO Peter Liguori on Q4 2016 Results - Earnings Call Transcript

| About: Tribune Media (TRCO)

Tribune Media Company (NYSE:TRCO)

Q4 2016 Earnings Conference Call

March 1, 2017, 8:30 am ET

Executives

James Arestia - Director, IR

Peter Liguori - President & CEO

Chandler Bigelow - EVP & CFO

Eddie Lazarus - EVP, General Counsel & CSO

Brian Litman - SVP, Controller & CAO

Peter Kern - Interim CEO

Analysts

Marci Ryvicker - Wells Fargo

John Janedis - Jefferies

Kyle Evans - Stephens

Ryan Fiftal - Morgan Stanley

Craig Huber - Huber Research Partners

Barry Lucas - Gabelli & Company

Hamed Khorsand - BWS

Richard Greenfield - BTIG

Operator

Good morning and welcome to the Tribune Media Fourth Quarter and Full Year 2016 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions]. After today's presentation, there will be an opportunity to ask questions. [Operator Instructions]. Please also note today's event is being recorded.

I would now like to turn the conference over to James Arestia, Director of Investor Relations. Please go ahead, sir.

James Arestia

Thank you, Rocco. Good morning and thank you for joining us for our call to discuss Tribune Media's fourth quarter and full year 2016 results. With me on the call today are Peter Liguori, President and Chief Executive Officer; Chandler Bigelow, Executive Vice President and Chief Financial Officer; Eddie Lazarus, Executive Vice President, General Counsel and Chief Strategy Officer; and Brian Litman, Senior Vice President, Controller and Chief Accounting Officer. Also on call is Peter Kern, our Interim Chief Executive Officer.

Let me begin today by reminding everyone that this call may contain forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995 including statements about the company's expected future financial and operating performance. Forward-looking statements are subject to known, and unknown risks, and uncertainties and may be affected by many factors, including those listed in the special note regarding forward-looking statements and Risk Factors contained in the Company's Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission on March 1, 2017, and other filings with the SEC and in today's earnings release and presentation deck.

The company's actual results may differ materially from the results contemplated in the forward-looking statements. Information discussed on today's call speaks only as of today, March 1, 2017, and we assume no obligation to update any forward-looking statements whether as a result of new information, future events, or any other reason. Any rebroadcast or distribution of information presented on today's call after such date is not intended and will not be construed as updating or confirming such information.

We will also discuss non-GAAP financial measures today. For more information on our non-GAAP measures including reconciliations to the most comparable GAAP measure, please see the Exhibit to today's earnings release. A copy of our press release and conference call presentation as well as the Form 10-K have been posted to the company's corporate website, www.tribunemedia.com.

I will now turn the call over to Peter Liguori. Peter?

Peter Liguori

Good morning all and thanks for joining the call. This morning I want to begin on a personal note as you know this will be my last earnings call as Tribune Media CEO. Peter Kern a member of our board, Board of Directors will be stepping into this role while the company searches for a permanent CEO.

I will come back to Peter at the end of my remarks. But I want to start by expressing my gratitude and appreciation to all of our advertisers, partners, shareholders, all of you on the phone, and most especially to our 6,200 employees for their support and their help in transforming Tribune Media during the last four years.

It's been an exciting ride and a tremendous privilege to lead the company since 2013. Together we accomplished a great deal and we made Tribune Media into the successful company it is today.

With that, let's turn to our 2016 highlights and operating performance. In many respects, last year was a watershed year for Tribune Media as we executed a number of financial and strategic initiatives designed to streamline the company.

Today Tribune Media is a more focused, local television and entertainment company, well-positioned for long-term success and nimble enough to take full advantage of the opportunities that may arise from an extremely dynamic media landscape. The list of our accomplishments is significant.

First and foremost the company generated record, record consolidated revenues of nearly $530 million in Q4 of 2016 which drove our full-year consolidated revenues to $1.94 billion.

Our TV stations increased their share of political advertising revenue in their markets by nearly 200 basis points compared to 2012 on a pro forma basis for the local TV acquisition. 2016 was a near record year for political advertising for us. Importantly after normalizing our results for the impact of the Olympics, we also maintained our market share of core advertising revenues for the year.

We launched two new breakout dramas on WGN America 'Outsiders' And 'Underground' both met with critical praise to over record number of viewers to the network and help generate significant improvement in our overall prime time ratings.

We sold Gracenote our digital and data entertainment business to Nielsen, the goal standard in data analytics for $560 million in gross proceeds before adjustments.

We sold more than a $0.5 billion of real estate putting the company well on the path to realizing the estimated $1 billion valuation of its real estate portfolio. We renewed our affiliate agreements with the CW, ABC, NBC, and for our legacy FOX TV stations and we continue to earn significantly higher retransmission and carriage fees from our MVPD partners.

We extended our TV Food Network partnership agreement with Scripps Networks Interactive through 2020. We participated in the spectrum option and expect to realize about $190 million in gross proceeds in 2017.

And finally, in the first quarter of this year, we continued our balanced approach to optimizing our capital structure. We paid a special dividend of approximately $500 million. We repaid $400 million in outstanding debt and amended our credit facility to extend the maturity of our term loans. In total, between quarterly dividends and special dividends, we have returned $1.3 billion to shareholders since 2013.

On the local station side, we continued our strategy of driving increased market share by expanding local news and adding live sports were possible. The quality of our programming supported continued significant increases in retransmission revenues.

Our local TV business, and in particular the nearly 80,000 hours of local TV news we produced annually has perhaps never been more vital to the communities we serve. At a time when everyone has been boarded with claims of fake news, alternate facts, and partisan reporting and commentary, our viewers know that they can rely on the journalist at our TV stations to deliver relevant, useful, and relatable news coverage in a timely, accurate, and a projected fashion.

That's because our local TV stations reflecting service irrespect of communities. Our news is read and delivered by people who read in the community or from the community and know instinctively what's important to their local audience. Think of it almost as our version of, of the people, by the people and for the people as to work. This connection to the local audience has enabled our newscast to rank number one and number two in 21 of the 27 markets where we produce local news. That in turn helps drive increases in CPMs and total advertising revenue. It also enables our TV stations to increase their share of political advertising in election years as we did in 2016 while maintaining their market share of core advertising revenue.

Finally, local news and live sports programming and the audience that they deliver are extremely valuable to our MVPD partners. That value is reflected in the growth we've seen in retransmission revenues which were up 20% in Q4 and up 18% for the full-year 2016. And as we said in our last call, we expect this year's growth in retransmission revenue to surpass the growth we saw in Q4.

At WGN America, our strategy of investing in popular movies and high quality original and syndicated programming is delivering measurable positive results, first in the numbers, distribution, ratings and carriage fee revenue are all up, even in a phase of industrywide headwinds. By next month, WGN America's distribution will climb to more than 18 million Nielsen homes up from the 65 million we had just a few years ago. In the fourth quarter of last year, WGNA ratings grew in the mid-to-high-teens in every single day part amongst our key adult 25 to 54 audiences, and in prime time WGNA was one of only three cable networks industrywide to see any growth at all in that coveted journal.

For the full-year, while prime time ratings at most general entertainment networks fell in average of 6%, WGNA bucked the trend and was up 16% among all viewers and up 14% among those aged 25 to 54.

Our two original new series 'Outsiders' and 'Underground' ranked among the top 15 cable dramas last season and help propel WGNA to the most successful upfront in its history. CPMs were up over 20% in prime time and up over 30% for our originals and season 2 of Outsiders is again drawing impressive numbers equal to those of last year and that's incredibly exceptional in today's competitive environment. Season 2 of Underground debuts in exactly one week so be sure to tune in. That kind of audience growth generated significant increases in carriage fee revenues in fourth quarter and full-year of 2016, up 35% in fourth quarter and up 42% for the full-year.

Now let me pause here and take a bit of a step back so I want to highlight the fact that non-advertising revenues like those generated by retransmission, consent, and carriage fees are becoming a larger and larger share of our overall revenue base.

In 2013, retrans and carriage fee revenue represented a gain of 12% of our total TV&E revenue on a pro forma basis. Today that number is more than double to 24%. Over the next few years, I think we have a nice balance between agreements that are already in place with mandated contractual step-ups and agreements that are up for renewals. This will enable us to take advantage of broadcast steadily rising retrans rates as well as the value that we have created at WGN America.

Chandler is going to provide you with more detail on our financial results in a moment and will give you specifics of our 2017 financial guidance which is outlined in our press release and our final presentation.

Now to wrap up my last earnings call with you all, allow me to offer a few final observations. Four years ago as Tribune Media was emerging from Chapter 11, the board made the decision to grow this company, invest in it, and transform it. I'm fortunate that I was chosen its CEO to help chart that path. Together with this excellent management team and our incredibly talented employees we have successfully transformed Tribune Media. Thanks to the acquisition of Local TV; Tribune has the scale it needs to compete in the current environment. We right sized our publishing operations and gave the businesses independence. We successfully converted WGN America from a superstation to a successful entertainment cable network with high quality original and syndicated programming broad distribution and ever increasing advertising and carriage fee revenues and it is now a strong contributor to our financial performance.

We bought Gracenote and combined it with Tribune Media Services to create the world's leading digital and data Entertainment Company. Then we sold it to Nielsen which enabled us to streamline Tribune Media into a pure play local television and entertainment business.

And finally, we monetized other non-core assets like classified ventures and their real estate and this process continues with Tegna's exploration of strategic alternatives for Careerbuilder.

And as I said earlier, along the way we returned $1.3 billion to shareholders. I'm proud of these transformative achievements but also excited by the opportunities ahead and very confident in my decision to step-down. With the streamlining of Tribune Media to a more local television focused company the time is right for a new CEO with a new set of experiences and a depth of knowledge and specific experience related to local television.

Now before I turn the call over to Chandler, I do want to introduce Peter Kern, who is going to be taking over on an interim basis while the search for a permanent CEO continues. Peter is not only a member of our board; he is very familiar with the company. Peter's 25 years of experiences in media executive, investor, and advisor and he was the smart natural choice to lead Tribune Media during this important transition period. Peter is not going to be taking any questions today but he did want to take a moment to address you briefly.

So I will turn the call over to him and then we will move to Chandler. Peter?

Peter Kern

Thank you, Peter for the generous introduction and good morning everyone. I won't take much of your time today but I did want to take this opportunity on behalf of the board of directors to thank again Peter Liguori for his leadership and tireless efforts in transforming Tribune over the last four years. As for myself, I have been working with Peter and the senior management team over the last month to ensure a smooth transition. We will continue to focus the company on operational improvement and our ongoing strategic review in an effort to drive shareholder returns. I will be back to speak with more comprehensively when we report on our first quarter results later this spring but for now, I will turn the call back to Peter and Chandler. Thanks.

Peter Liguori

Thanks Peter. And with that, I will ask Chandler to walk you through a closer look at our 2016 results and our financial guidance for 2017. Mr. Bigelow?

Chandler Bigelow

Thank you, Peter, and good morning everyone. As a quick reminder we filed our 2016 10-K this morning and posted a presentation to our website that contains supporting materials.

One important comment before I get into the numbers, our consolidated results presented digital and data operating results as discontinued operations for all periods presented. The sale of our Gracenote business to Nielsen closed on January 31, and as a result, all references to consolidated results in my remarks are related to our continuing operations.

As Peter noted, Tribune's fourth quarter results were very strong and came right within the revised financial guidance that we discussed back in November. Consolidated revenue was up 11% or $52 million in the quarter. Thanks to strong political advertising and continued growth in retransmission consent revenue and carriage fees, partially offset by a $33 million decrease in core advertising and a $9 million decrease in real estate revenues compared to 2015 due to the recent sale of a number of large real estate properties. When you exclude real estate, fourth quarter revenue was up 13%.

For the full-year of 2016, consolidated revenues of $1.95 billion were up 8% again due to gains in political advertising, higher retransmission consent revenue, and carriage fees, partially offset by $53 million decrease in core advertising and $11 million decrease in real estate revenue. As discussed on the last earnings call, while total advertising was up significantly last year, core advertising was down somewhat due to the crowd out effect of the Olympics and political advertising.

Consolidated operating expenses excluding impairments, real estate gains, and other items were essentially flat in the fourth quarter of less than 1% and for the full-year were up 4%.

Consolidated adjusted EBITDA for the fourth quarter increased approximately $50 million or 38% to $182 million and for the full-year, consolidated adjusted EBITDA was up 21% or $91 million to $531 million. In addition to our adjusted EBITDA we received approximately $171 million of cash distribution in 2016 from our equity investments which include our stake in TV Food Network and Careerbuilder.

So in total, our adjusted EBITDA plus the cash we received from our equity investments was $702 million in 2016. We continue to be very pleased with the results of TV Food and we applaud the growth this script continues to drive.

Lastly, I would note that adjusted EPS for the fourth quarter of $0.85 per share was up 52% compared to the fourth quarter of 2015 while full-year adjusted EPS of $2.13 per share was up 38% versus 2015.

Now turning to the results of our Television and Entertainment segment, in the fourth quarter revenues were up 13% to $526 million. This very strong growth was fueled by political advertising as well as a 20% increase in retransmission consent revenues, a 35% increase in carriage fees, and a 7% increase in digital advertising.

Core advertising revenue was down 10% in the quarter basically in line with our comments that we made during the last earnings call due to the impact from political displacement. Specifically we generated about $90 million of gross political revenue; advertising revenue in the first five weeks of the quarter, as you can imagine this caused significant displacement to core advertising.

For the full-year TV&E revenue was up 9%. TV&E adjusted EBITDA in the quarter grew 32% and for the full-year, TV&E adjusted EBITDA totaled $604 million an increase of $91 million or 18% as higher political advertising retransmission consent revenues and carriage fees growth were partially offset by higher expenses which were up primarily due to the increase in reverse compensation expense. I would note that excluding reverse compensation fees last year, all other programming expenses were down during the year and importantly on that retrans margin continues to be in the 50% range.

Now turning to Corporate and Other which includes the results of our real estate operations which I think as everyone knows are becoming less of a contributor to our operating results since we sold over $0.5 billion of real estate last year. And in fact in the fourth quarter of 2016, our real estate revenue was down 69% to $4 million. And despite this lower real estate revenue, our total adjusted EBITDA loss for corporate and other improved 8% versus last year, thanks to general expense management. And for the full-year of 2016 with real estate revenues down 23%, our total adjusted EBITDA for Corporate and Other represented a loss of $73 million which was slightly less than last year.

Now turning to our balance sheet, we ended 2016 with cash of $578 million and total debt outstanding of approximately $2.5 billion. However since year-end we have been very busy as we sold Gracenote for $560 million on a pre-tax basis and repaid $400 million of our debt from these proceeds. We also paid $499 million special dividend on February 3 using cash from our balance sheet.

I would also note that we successfully amended and extended our credit agreement in January which extends $1.8 billion of term loans out an additional three years through January 2024. And in addition, we executed a $500 million floating for fixed rate interest rate swap earlier this year which effectively locks in a floating rate term -- effectively locks in our floating rate term loan for that proportion to 5.25 and brings our fixed floating mix to balance of 50:50.

After reflecting all this activity, our debt outstanding is approximately $3.1 billion with a weighted average interest cost of approximately 4.75.

From a shareholder distribution perspective in 2016, we repurchased 6.4 million shares for an aggregate price of $232 million off of our current board authorization of $400 million. Including stock repurchases and our quarterly dividends we returned approximately $322 million to shareholders in 2016, and as I mentioned we just paid $499 million special dividend.

Management has and will continue to take a balanced approach with the use of our significant liquidity in the context of our leverage profile.

One additional point before I discuss guidance, I'm pleased to report that we have remediated the material weakness of our IC Internal Controls that we described last year in our 2015 10-K.

Now before we open up to questions, let's review our financial guidance for the full-year 2017. We expect consolidated revenues to be between $1.865 billion and $1.916 billion with the mid-point of this range reflecting a 3% decline versus last year. However when you exclude our real estate operations the mid-point of this range calls for revenues to be down only 1.5% which we believe is very strong performance given the loss of approximately $140 million of net political advertising revenue this year and reflects the continued strength of retransmission consent growth and the stability of core advertising.

We expect consolidated adjusted EBITDA which again includes our real estate operations to be between $440 million and $480 million. Consolidated operating expenses on the basis used in the calculation of adjusted EBITDA will be up approximately 1% in 2017.

TV&E segment revenues are expected to be between $1.855 billion and $1.905 billion and this range includes the following assumptions: first, we currently are expecting the growth in retransmission consent revenues to outpace the growth we saw in the fourth quarter of 2016 which is 20% and it's important to note that more than 99% of our retrans revenue for 2017 and our carriage affiliated revenue is locked at this point given our contracts; second, full-year 2017 core advertising will be up in the low-single-digits as the percent changed which assumes core advertising pace accelerates during the year as we cycle pass significant displacement from the Olympics and political from last year.

TV&E adjusted EBITDA is expected to be between $523 million and $559 million. Our real estate revenues are expected to be between $10 million and $11 million and real estate expenses are expected to be between $5 million and $6 million. Corporate expenses when you exclude real estate are expected to be between $84 million and $88 million which translates to a reduction of between 4% and 9% versus last year as we continue to drive overhead efficiencies throughout the organization.

Lastly, we expect capital expenditures to be between $75 million and $95 million, cash taxes to be between $85 million and $100 million, and cash interest of approximately $152 million.

Now a few last points in relation to these expectations. While we do not provide quarterly financial guidance, it's important to note that the timing of when we air original programming on WGN America impacts our quarterly results. Late last year, we expect first quarter adjusted EBITDA to be significantly lower than the three other quarters during the year as the first quarter of 2017 will include the airing of all three of the originals on WGN America as sale wrapped up in January, we will premiere the second season of Outsiders beginning on January 24, and on March 8, we will premiere the second season of Underground.

At the same time, recall that in the first quarter of 2016 we reported $15 million of net political advertising revenue and in the first quarter of 2017 we expect this to be only about $2 million.

In summary, we are pleased with our very strong fourth quarter and full-year 2016 financial results and we feel confident that the company is well-positioned to continue driving value to shareholders in 2017.

That concludes our remarks and we will now open the lines up for questions. Thank you very much.

Question-and-Answer Session

Operator

Thank you, sir. We will now begin the question-and-answer session. [Operator Instructions].

Today's first question comes from Marci Ryvicker of Wells Fargo. Please go ahead.

Marci Ryvicker

Thanks. I have a couple. The first I just want to talk about the current pace and the tone of business. I know Chandler you talked about low-single-digits in core for the year, curious if you are seeing every else the same where Q1 started really slow and it's gaining momentum and then the acceleration through the year anything that you're seeing or is it just due to the comps which get easier from a core basis?

Peter Liguori

It was combination of the both, this is Peter, Marci how are you. First, as you outlined yes throughout the quarter pace clearly has picked up. So we will be able to take advantage of the quarter-on-quarter comparisons when you're looking at that back half of the year but we are highly encouraged by what we are seeing throughout the first quarter in terms of the pace. We are noticing exactly everyone else is recognizing, business coming in late it's much more challenging to get visibility but things are moving in the right direction and more than anything, I point you to our full-year guidance.

Our 2017 consolidated revenues are going to be up in the mid-single-digits. When you look at core, we are looking at the optimal low-single-digits and we really have some rock solid retrans and carriage fee expectations and it's basically exemplified in two areas about 99% of our deals are locked into the year and we are fully expecting to have a faster stronger pace than we did in 2016 where revenues were up 18% since the carriage and retrans.

Marci Ryvicker

Okay. And second question now that the reverse part of the options over the quite period is done, how are you thinking about the station group under the strategic review and I guess the Street is assuming you're more of a seller than a buyer. So can you comment on that?

Peter Liguori

Look, we are always looking at what we do with our portfolio to maximize shareholder value. And with or without a strategic review that is our day-to-day operating thesis on this business and we are committed to maximizing that value by if and when there are changes to the environment, we will examine them accordingly.

Marci Ryvicker

Okay. And then last question for Chandler, how do we think about leverage, I think you had so much going on I think the Street was hoping that your net leverage will come down over time and it's happened. So are you comfortable with leverage over four times I guess even in this current potentially regulatory environment?

Chandler Bigelow

Yes, Marci. We are comfortable with the range we are currently in, it's been pretty steady, I think it goes without saying we are very confident in significant liquidity that we've been to drive from both the operations as well as our asset sales and so in this environment we are comfortable with that range.

Operator

And our next question today comes from John Janedis of Jefferies. Please go ahead.

John Janedis

Yes, thanks, best of luck, Peter.

Peter Liguori

Thanks, John.

John Janedis

Two quick questions. One is could you talk a little bit more about the programming budget at WGNA this year as to what extent we should expect more or less original series and then secondly given yesterday's YouTube announcement and more to come I presume from Hulu and others and I would think you are well-positioned given your large market exposure to be part of this offering. So can you update us on any agreements you signed and to what extent WGNA needs to be part of a deal?

Peter Liguori

Sure, thanks John. Look basically when we are looking at our programming expenses at WGNA were flat to down. When you look at the results of WGNA the results of WGNA are pretty impressive. Again when you look at where were in the fourth quarter in our key demo, we're up in every single day part, total day, daytime, fringe, prime, late fringe, in mid-teens, mid-to-upper teens. When you look at the environment it was up about plus 16% in fourth quarter, EMEA was up 3%, USA was up 2%, and everybody else was down. In January the momentum is continuing, we're up about 24% with only History being up 10% that's the only other network in January, cable network that's up everybody else is down.

In general looking at our CPMs very strong upfront. Our CPMs are up about 40% versus when we started the branding strategy; I need to say our carriage fees very strong. So we now married this mix of very, very mindful programming expenses we've seen robust increases in our revenues.

Now when you turn to OTT, we are talking to everyone, we view OTT as an opportunity to expand distribution and expand the concomitant revenues. Ideally we will be making these deals and our goal is to make these deals on clearly on economic terms which are far strong and favorable.

When you look at the conversations we have been having clearly OTT providers want local, it is a very important part of a robust relatable offering and WGNA is in fact a part of those conversations and I think in part due to the strength of the audience that we're able to generate, the value that we have been providing to our advertisers, and clearly affiliates are rewarding us with the added distribution and subscriber fees.

John Janedis

Thanks. May-be one follow up and Peter so I guess then it's fair to say WGNA saw profit growth last year?

Peter Liguori

Yes.

Operator

And our next question today comes from Kyle Evans of Stephens. Please go ahead.

Kyle Evans

Hi thanks. Chandler, thank you for the 2017 retrans guidance. I'm looking at some old may be even ancient guidance for net retrans growth through 2018 of 20%. I know we had a little hiccup with DISH in the third quarter this year without that, we would have been right at 20%, are you still comfortable long-term with that 20% number?

Chandler Bigelow

Kyle thanks. We are not guiding like that anymore. I think that just echoing what we've already said we feel very good about the pace of retransmission consent revenue growth. It accelerated in the fourth quarter of last year. We expect on a full-year basis, in 2017, that that growth will actually be higher than last year. And so the way I answer that question is that we are really seeing a very strong renewals, very strong contracts, and continue to be confident that we can continue to drive that growth long-term.

Kyle Evans

May be you could help me think about the 2018 net retrans outlook differently than maybe we could talk a little bit about here, given an update on network renewals and subscriber renewals in 2017?

Peter Liguori

Hey Kyle this is Peter. As you look out a little bit over the horizon with 2017 we have 99% of our deals done. As you look towards 2018 we are at least two-thirds of our contracts are done and again it's nice balance being able to take advantage of the marketplace which is noticing increase in fees and having the predictability of at least two-thirds of our affiliate yields being done.

With that, as we continue to guide, we continue to talk about retrans being at 50% level for us. So I think that's kind of how you should train your thinking thematically and knowing full well that there is a lot last year level to be indexed 12 to 24 months.

Operator

And our next question comes from Ryan Fiftal of Morgan Stanley. Please go ahead.

Ryan Fiftal

Great, thanks. Good morning. I have two questions. So first did you give a core ad revenue pace and guide for 1Q I apologize if I missed this. And then --

Peter Liguori

No and we don't give quarterly guidance.

Ryan Fiftal

Okay. And then second, Chandler, I was wondering if you can help unpack I guess the implied OpEx guide in the TV&E segment for 2017. I think the mid-point of your ranges implies about 3% total OpEx guide in that segment. And if I think you said reverse comp is holding in a similar 50% margin. So I think that that roughly implies no OpEx growth in the rest of the segment. So I'm wondering is that the right conclusion and then where some of those offsets are coming from how you are holding compensation cost and other programming costs and that sort of thing. Thanks.

Chandler Bigelow

Right. So I think your math is correct with respect to the implied growth in those expenses. And I would say that when you exclude the growth in reverse compensation generally speaking across the entire operation, you have a very tight control on expenses. There are ups and downs obviously, but I think as we talked about last year we endeavored to do some very key previews from an organizational perspective, we were able to become more efficient across the station group, obviously our expenses in the fourth quarter show that the fruits of that efforts are taking hold.

Our corporate guidance for 2017 also reflects reductions. So I wouldn't point to one thing but we continue to think about all of our expenses, compensation, non-compensation and so I think the headline is that when you exclude the continued growth in reverse comp, we have a very tight control on expenses across the company.

Operator

And our next question today comes from Craig Huber of Huber Research Partners. Please go ahead.

Craig Huber

Yes good morning. Thanks for taking the questions and good luck Peter as well.

Peter Liguori

Thank you, Craig.

Craig Huber

If I could sort of ask the nitpick question here, is the SuperBowl impacting your ad revenues in the first quarter with your 14 FOX stations, I guess versus six CBS a year ago. Did that help you guys by roughly $10 million am I thinking about that correctly?

Peter Liguori

Yes, it helps Craig. We are not going to comment on the exact number but certainly with our footprint it helped this year.

Craig Huber

Is that something you would give out once you guys report the quarter perhaps?

Peter Liguori

Looking there, Craig.

Craig Huber

What is -- it will be helpful just understand the underlying number. Just another nitpick question auto, in the month how did that do in the month of December so you get away from the displacement and how is it tracking so far this quarter for your TV stations fleet?

Peter Liguori

What's been good is the direction December and January, December was a bit slow, January picked up versus December and is increasing every month. So we are heartened by what we are seeing in terms of direction. Thanks Craig.

Operator

And our next question today comes from Barry Lucas of Gabelli & Company. Please go ahead.

Barry Lucas

Great, thanks, and good morning Peter. Two areas if you could and may be expand on Craig's question providing a little bit more color on other categories how they did post the election and were there regional differences within the station group big market versus small, east versus west that kind of thing. And I have one other?

Peter Liguori

Yes, Barry look when you say coming out of the election mostly in 2017 things tend to historically be at this low. When you look at it, we did notice softness in auto and telecom and certainly education with everything we're seeing in this sector. Large markets somewhat affected more than small ones. But you more than anything again I would encourage everyone to acknowledge the case that is picking up and also to go and looking we're guiding up for the year, we are expecting a positive movement in positive direction. Your second question, Barry?

Barry Lucas

Yes, going back to the original estimate of $1 billion of real estate then you sold $516 million and there were some other sales earlier. Of the original billion perhaps maybe you could provide a proportion of what's left in any other larger partials that might be highlighted?

Chandler Bigelow

Yes, it's a bit more than half and we continue to maximize the value of those properties and continued to talk to folks about it, Barry.

Barry Lucas

Great. Thanks very much and good luck Peter.

Peter Liguori

Barry thanks a million. I appreciate it.

Operator

The next question comes from Hamed Khorsand of BWS. Please go ahead.

Hamed Khorsand

Hi, good morning. First off I just wanted to ask you with advertisers being locked up with political ad season are those core advertisers coming back at all or was that loss to just different kind of median and also how are you going to do with the carriage fees is that going to hit a cap here and given everything is going digital?

Peter Liguori

Well let's break those two out. Advertisers have come back and they have come back to us. And again they have come back to us in a fairly typical fashion post presidential year to clearly align with what was going in 2012.

And you're asking a somewhat broader question Hamed and I'm going to open a little bit on that. You're saying in TV, in fact I think has been some signs out there that there is a little bit of a rollback towards TV. What you're seeing is in the marketplace. The growth in digital is coming from the Amazons and Facebooks of the world it's not coming from a ton of other digital offerings.

And I look at -- we're doing Proctor & Gamble on the advertising front for a number of years. I look for P&G as being a little bit of bellwether. And there were two signs that P&G discussed I think over the last six months one the investment they made in Facebook advertiser have actually rolled back that $250 million and looking at deploying it back in TV. And I looked on further revenue SuperBowl I mean they fixed it in the SuperBowl. It is showing the value the TV, TV commercials, TV video commercials have for brands.

In terms of carriage fees, I just continue to be bullish on as long as we're offering the value to cable operators we're able to offset all the secular wins. I mean we've grown WGNA from 65 million to 80 million homes since we started our regional program, just our programming strategy in general. We have more -- we have increased our carriage fees about two-and-a-half times in what because we're offering a value. And that is important we're offering not only a value we construct even with a show like Underground we're actually offering a value to an unreserved audience. I mean we've been really pleased that Underground is the first TV series to premier at the Sony in African/American Museum. We were really, really honored to have season 2 also premier there. The commitments to presenting a value to every one of our partners with WGNA both on the affiliate front, advertiser front, and certainly on the audience front and paying off those dividends is what is in fact allowing us to continue that growth.

And so that is a particular strength of the network, we're bucking the trend. I've given you all those ratings numbers, you've seen the financial results that strategy is generated and, no we don't think there is a CapEx been forced somewhere carriage fees can go because of digital. Thank you, Hamed.

Operator

And ladies and gentlemen our final question of the day comes from Richard Greenfield with BTIG. Please go ahead.

Richard Greenfield

Hi, thanks for taking the question. So I wanted to just kind of dig into the whole topic of virtual MVPDs. Obviously there is a wide array of these things having launched or in the process of launching, I went to the YouTube TV launch yesterday, none of them really have affiliates on board yet. Wanted your perspective of kind of how you think about that relationship? We've heard from some of the networks that they built structures for the affiliates to enter into rather than the affiliates negotiating directly with the virtual MVPDs, is that something you're interested in or do you want to negotiate directly and also it seems like some of these virtual I look at DirecTV now which doesn't have the affiliates but all of the network programming is still being made available next day even where there don't have live programming. Just I just love kind of your thoughts on where that relationship is and what you think the future is for affiliate being part of these like Tribune?

Peter Liguori

Yes okay, overall first of all affiliates being part of us. And again we just look to these status negotiations and the conversation we have had to-date. There is zero doubt that they view these OTT services view local stations and local offerings as being something they need to compete toe-to-toe with MVPDs.

Two economics will dictate how these negotiations take place. But I think Dana and Eddie and their team doing absolutely outstanding job of negotiating with cable operators and in turn negotiating with virtual MVPDs. But we also have strong relationships with our broadcast affiliates. They're clearly seeing that economics will dictate how those conversations will take place and it's all there come out to watch. When Benjamin's or as the case I’d like to put it as when Harriet Tubmans Rule on everybody figures out how to work together and figure out how to maximize it Richard.

Peter Liguori

With that I want to thank everyone, I think my contract ended at 9.20, so now exactly 60 seconds over. It's been a real pleasure working with you all and I say that with all sincerity. I look forward to following you on in the future and thank you for your time.

Operator

And thank you sir, today's conference has now concluded. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.

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