Tribune Media Company (TRCO) Q3 2018 Earnings Conference Call Transcript

Tribune Media Company (NYSE: TRCO)
Q3 2018 Earnings Conference Call
Nov. 9, 2018, 8:30 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good day, and welcome to the Tribune Media Company Third Quarter 2018 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the * key followed by a 0. After today's presentation, there will be an opportunity to ask questions. To ask a question you may press * then you're your touchtone phone. To withdraw your question, please press * then 2. Please note, this event is being recorded.

I would now like to turn the conference over to Gary Weitman, Senior Vice President, Corporate Relations. Please go ahead.

Gary Weitman -- Senior Vice President, Corporate Relations

Thank you, Andrew. And good morning everyone, and thank you for joining us on our call to discuss Tribune Media's third quarter 2018 results. With me on the call today are Peter Kern, Tribune Media's 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.

Let me begin today by reminding us all 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 Form 10-Q filed with the U.S. Securities and Exchange Commission on November 9th, 2018, and in today's earnings release.

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, November 9th, 2018, 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. We reconcile each non-GAAP measure to the most comparable GAAP measure in an exhibit to today's earnings release. A copy of our press release and conference call presentation, as well as the Form 10-Q, have been posted to the company's corporate website, tribunemedia.com, and on the company's Investor Relations mobile app. And with that, I will turn the call over to Peter.

Peter Kern -- Chief Executive Officer, Director

Thank you, Gary. Good morning, everyone, and thank you for joining the call. As you can see from our press release and 10-Q, Tribune Media had a strong third quarter highlighted by record political revenues, solid core advertising, and continued diligence around expenses. As you'd expect, we're very pleased with our results and with the continued progress we have made in broadcast share gains, WGNA profitability, and monetization of non-core assets. These results reflect the strength of our portfolio of businesses and the superior execution of our team and position us well to drive shareholder value going forward.

At our television and entertainment business, we saw robust year-over-year growth with total advertising up 11%, powered by very strong political advertising and firming up of core. I'd like to spend a minute discussion both of those areas. First, on political Q3 advertising revenues were the strongest they've ever been for Tribune Media Company, up 90% from the last midterms in 2014, and up 36% from the presidential cycle in 2016. As I mentioned on our last call, this growth reflects not only unprecedented amounts of political spending in our country but also significant share gains driven by our strategy and execution.

Since 2013 we have expanded local news across our station group by 300 hours per week, and we have focused on news performance, ranking No. 1 or No. 2 in 21 of the 27 markets where we produce local news. These factors, along with a determined and focused effort by our sales team, enable us to grow our share of political revenue by an estimated 240 basis points in Q3 2018, compare to Q3 2014.

And now with the election behind us, I can tell you that the numbers for Q4 and full year are even stronger. Net political ad revenue in the fourth quarter is expected to be roughly $99 million, up 80% over 2014 and 29% over 2016. Full year gross political advertising is expected to be approximately $202 million, with net political of approximately $172 million -- both record numbers for Tribune Media Company. These unprecedented numbers suggest we may be seeing a fundamental shift in spending patterns in this category. Not only have the numbers grown significantly, but we may be seeing the start of an always-on political cycle. Even in off-cycle years, it's quite possible we'll see meaningful increases in political advertising.

Perhaps most important, though, this massive political spending on local broadcast TV is a clear demonstration of the continuing power and relevance of the medium. There really is nothing like it when it comes to reaching large engaged audiences and building a brand.

Now, with all that political advertising we did see some displacement of core advertising in Q3. Still, core was so strong it held up well and was down just 2%, which was a significant improvement over the first half of the year. This upward trend is primarily due to better performance in our larger markets, in national advertising, and in the automotive category.

Importantly, but for the displacement caused by political, we estimate that core advertising would have been in positive territory in Q3. We believe that this will be the case in the fourth quarter, as well. While core advertising is currently pacing down in mid-single digits for Q4, we estimate that it would be up absent the significant displacement caused by record political advertising in October and November.

Our TV and E segment also benefited from strong growth and retransmission and carriage fees, which were up again substantially this quarter thanks to the strength of our station group and WGN America. Solidifying this upward trend for the long term, our new agreements we recently reached with several MVPDs including Verizon. As I mentioned on our last call, MVPD agreements covering roughly 50% of our footprint will be up for renewal over the next 14 months and we expect to continue generating significant increases in rates from these renewals. At WGN America, our shift in programming strategy continues delivering positive results and the network was, once again, a strong and growing contributor to the bottom line this quarter.

Now turning to Q3 expenses, while there was a lot of noise in the expense line, the main takeaway is that expenses were in line with our expectations and we continue to focus on efficiency throughout the organization. This quarter, freed from any pending transaction, we took several long-term steps that we believe will improve efficiency and increase ROI at our TV station group and at WGN America in 2019. We believe there's still more we can do and we'll continue being aggressive on this front.

That said, we did experience a significant in reverse comp this quarter for a one-time reset of our network affiliation agreements with TV stations in 8 of our FOX markets. This was the legacy of our acquisition of local TV back in 2013, the terms of which allowed us to pay heavily discounted affiliate fees on these stations up until this past summer. With the expiration of that deal, we reset our affiliation fees at anticipated levels and we continue to have a very productive relationship with FOX.

Now before I turn it over to Chandler, I want to quickly cover a couple of other important topics. The first is TV Food Network. We're extremely pleased with the operational performance of the network and the steps being taken by Discovery to grow revenues and EBITDA. While there were some timing issues and cash distributions as a result of the new tax regime, which Chandler will cover in a moment, in the long run, we expect improving performance and the new tax code will help drive increasing cash flows for Tribune.

I also want to touch on the continued monetization of our real estate portfolio. As you may have seen, we recently sold 2 more properties for net proceeds of $59 million. In addition, we just received approval from the Chicago city council for the zoning changes and entitlements we need to go to market on our largest remaining piece of real estate -- 37 acres in downtown Chicago.

Finally, as the year comes to a close, we intend to continue our focus on driving efficiency across our company and leaning into areas of strategic advantage. We believe our strong balance sheet and strong operating performance will offer us many ways to continue to drive shareholder value.

And with that, I'll turn it over to Chandler.

Chandler Bigelow -- Executive Vice President and Chief Financial Officer

Thank you, Peter. And good morning, everyone. As a reminder, we filed our 10-Q this morning. A link to the document is available on our website. And as Peter noted, we are extremely pleased with our performance in the third quarter and the first 9 months of 2018. On a consolidated basis, our reported Third Quarter revenue of $498 million was up 11%, or $47.5 million, as compared to last year. And as we noted in our press release, revenue was up 12% when you exclude barter revenue recorded in 2017.

As a reminder, we no longer recognize barter revenue and expense under the new revenue accounting guidance we adopted in the first quarter of this year. Reported consolidated operating expenses of $461 million were down 4%, or $19 million, in the quarter, but did include a number of significant items that I will discuss in more detail in a moment.

Consolidated operating profit to the quarter was $37 million, which was up $67 million versus last year's operating loss of $29 million. Our adjusted diluted earnings per share was $0.63, as compared to $0.31 in the third quarter of 2017. In a reconciliation of our reported diluted EPS to our adjusted EPS is included in the financial tables of our range release.

Consolidated adjusted EBITDA for the third quarter increased approximately $17 million, or 14%, to $137 million. For the first 9 months of the year, reported consolidated revenues of $1.43 billion were up $71 million, or 5%, and up 7% when adjusted to the barter revenue impact. Reported consolidated operating expenses, excluding the $133 million gain from the sale of our Spectrum, were $1.24 billion, down $156 million or 11%. Operating profit, excluding the gain from our Spectrum sales, was $189 million for the first 9 months of the year, which is up $227 million as compared to the $38 million operating loss in 2017.

For the first 9 months of 2018, adjusted EPS is $2.13 versus $0.60 last year. Consolidated adjusted EBITDA for the first 9 months in 2018 is $418 million, an increase of approximately $145 million or 53%.

In terms of our equity investment in TV Food Network, as Peter noted, we are very pleased with the recent financial performance at that network that's resulted in an 11% increase in our income from TV Food for the first 9 months, ended September 30th, 2018.

With respect to the third quarter, we received no cash distribution from TV Food Network, as TV Food adjusted its year-to-date quarterly tax distributions to reflect the lower tax rates enacted as part of the tax reform legislation passed last year. This is purely a matter of timing, and we will receive our cash for the 2018 income in the first quarter of 2019. And as a reminder, we estimate that last year's tax reform legislation will result in a 2018 cash tax savings of approximately $25 million on our TV Food income for the year. Our year-to-date distributions from TV Food are approximately $153 million.

Now turning to the results of our Television and Entertainment segment. Reported third quarter revenue was up 11% to $495 million and up 12% when adjusted to exclude barter. Driving this record level of Third Quarter revenue was a significant increase in total advertising, which was up 11% in the quarter to $327 million. And, as Peter mentioned, this growth is due, in large part, to record political spending in the quarter as well as solid core advertising results. Our TV and E revenues also benefited from a 12% increase in retransmission revenues and a 30% in carriage fee revenue. On a combined basis, total retrans and carriage fee revenues in the quarter were $157 million and up 16% as compared to the third quarter of last year.

TV and E reported operating expenses were down $21 million or 5% in the third quarter, primarily due to lower programming expenses which benefited from lower programming impairment charges in the absence of barter expense. As noted in our press release and 10-Q, this quarter we recorded a $28 million programming impairment for the syndicated program Elementary at WGN America, compared to an $80 million program impairment for the programs Elementary and Persons of Interest in the third quarter of '17.

This reduction in programming expense is partially offset by a $24 million increase in network affiliation fees in the quarter, primarily as a result of the renewal of the FOX affiliation agreement for stations in 8 of our FOX markets that Peter noted earlier.

Television and Entertainment adjusted EBITDA was a record $153 million in the third quarter, a 13% increase over last year. Importantly, the company continues getting a meaningful contribution from the shift in programming strategy at WGN America. Also, third quarter TV and E broadcast cash flow was up $41 million, or 32% compared to last year.

For the 9 months ended September 30th, 2018, TB and E revenue totaled $1.42 billion, which is up $72 million or 5%. Total advertising revenue, including political and digital, was up 1% led by year-to-date political revenue, which was up $61 million compared to the 9 months ended September 30th, 2017. TV and E programming expenses were done $124 million or 25% for the 9-month period ended September 30th.

Television and Entertainment adjusted EBITDA was $462 million for the first 9 months, an increase of 43% or $140 million over last year. And year-to-date broadcast cash flow was up $126 million, or 39%, as compared to the first 9 months of 2017.

Turning to Corporate and Other I'd say that while we continue to aggressively manage our expenses, we did see a modest uptick in the third quarter reported expenses following the termination of the Sinclair transaction, including expenses related to a retention incentive program.

Now, before we open things up for questions, I want to review a few other important financial highlights of the company. With respect to the balance sheet, Tribune ended the quarter with cash of $888 million. I'm pleased to say that this balance is over $1 billion of cash, thanks to strong political advertising receipts and the proceeds from the real estate sales that Peter mentioned. We have total debt outstanding of approximately $3 billion. Our net debt leverage -- net of our cash on the balance sheet as of September 30th, 2018 -- is about 2.7x our trailing 12-month adjusted EBITDA plus the cash we received from Television Food.

Interest expense in the quarter was $43 million and $125 million for the first 9 months 2018. And the current weighted average interest cost of our debt is approximately 5.5%. Interest income in the quarter was approximately $3 million. As I mentioned last quarter, due to tax reform, Tribune realized about 14% improvement in our tax rate. Our current effective tax rate is now approximately 26%, including both federal and state.

So, to recap, this was Tribune Media Company's strongest Third Quarter revenue and EBITDA from our continuing operation. Local advertising revenues came in at record levels, and core advertising trends have improved significantly during the year. WGN America and TV Food are performing very well. Our balance sheet is strong, we are making meaningful strides in the continued monetization of our real estate portfolio, and the fourth quarter is shaping up for a great finish to the year.

And with that, we'll open up the line for questions.

Questions and Answers:

Operator

We will now begin the Question and Answer session. To ask a question, you may press * then 1 on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press * then 2. At this time, we will pause momentarily to assemble our roster.

The first question comes from David Joyce of Evercore. Please go ahead.

David Joyce - Evercore ISI -- Analyst

Thank you. I was wondering if you could provide some highlights on ratings data points for your newscasts. Do they live in certain markets that are maybe helping to move the needle on the advertising front? And also, how the primetime programming is helping the lead-ins there. Thank you.

Peter Kern -- Chief Executive Officer, Director

Okay. Interesting question, David. Good morning. I would say, as I mentioned, we're always striving to be No. 1 or No. 2 in all of our markets. Certain of those markets obviously we have historic advantage and dominance of a Big-4 station and we're driving those. We've added a lot of news hours, which has helped us get political money. And then, I would say the places where we're driving the most news performance, we're not necessarily No. 1 in news, but we may be No. 1 in news hours. Places like L.A. and Chicago, where we have independent stations with very large news footprints that proved very remunerative in the political cycle.

As you probably know, there was a big governor's battle in Chicago, and the fact that WGN-9 is essentially a news leader -- maybe not No. 1 in the late news period -- but in news hours and total news ratings points, the leader in the market. And that paid great dividends. Likewise, L.A. -- not quite the same political market -- though had a lot of issues on the ballot. And similarly, the quantity of high-quality highly rated news, even if not No. 1 or 2, was extremely valuable.

So, I think that's been more our strategy. We obviously have Big-4 markets, FOX's and otherwise where we are No. 1 or 2. We have duopoly markets where we use news across the duopoly, so all of those pieces sort of lead into it. I wouldn't say there was anything particularly of note in terms of primetime -- somebody's primetime being better than others. Obviously, we're hopeful and seeing good performance from Thursday night NFL on FOX, which didn't use to be our NFL game, or not in this size, since we had much less exposure to CBS.

So, I think those things are helping around the edges, but I think it's really kind of down-and-dirty kind of local performance. Our team's just driving better performance where they can. Better hours, more hours, and that's really been helpful in the political cycle and generally helpful advertising.

David Joyce - Evercore ISI -- Analyst

And just following on the advertising front, are you seeing any lists from the new category coming from the legalized sports and gambling? Is that assisting in some markets?

Peter Kern -- Chief Executive Officer, Director

Yeah. It's still small, but we are seeing, in the markets where it's relevant, we're definitely noticing green shoots and I would say we are extremely optimistic about its future for us and for broadcasting, generally, across the US as more states legalize it. So, I think we expect it to be a big and growing category. You know, you're seeing some of the historic fantasy guys getting into legalized gaming, and they were big and successful advertisers that, as you know, several years back drove enormous growth in that category. So, I think we are highly optimistic, but it is modest still, and it will help, but it's not big enough to sway our numbers one way or the other right now.

David Joyce - Evercore ISI -- Analyst

Okay. Thank you very much.

Chandler Bigelow -- Executive Vice President and Chief Financial Officer

Yep. Thank you.

Operator

The next question comes from Kyle Evans of Stephens. Please go ahead.

Kyle Evans -- Stephens, Inc. -- Analyst

Hi. Thanks for taking questions. Peter, you highlighted in your opening comments, kind of large moving expense pieces in the quarter. Chandler, you highlighted the new $24 million FOX reverse and programming was down 19% year-over-year despite that. Can you help us think about those big moving pieces in the quarter? Is the $24 million a good number looking forward into 2019? And when do the WGNA production and impairments kind of cycle off the model? Fall off.

Peter Kern -- Chief Executive Officer, Director

Yeah, sure Kyle. Thanks for the question. So, a couple bits and, unfortunately, it's a little noisy so it's a little hard to follow. But basically, I think about it as 2 parts: 1) we've had these impairment issues with some of the programming that was bought a long time ago for WGNA. We had a much larger impairment last year as Persons of Interest sort of ended production and then we could value kind of what was left in the cycle. Elementary is continuing to be produced, so as we get it we revalue it each time and unfortunately, we don't know when the end is, although its performance on CBS has not been particularly strong.

So, we would expect it to end fairly soon, but it's not up to us. So, that impairment will likely continue for some time unless the show decides to perform better or something else changes. So, the impairments went down year-over-year and that had the appearance of making programming look like it got much cheaper. On the flip side, we had the incremental network comp from this legacy FOX deal that is a good number. I think you can use it for the foreseeable future. And so, we're lapping, essentially, a year where we had much lower discounted network affiliations and now we're going to normalize at this new level. So, for the next several quarters until that's baked in and until we lap this quarter again next year, you won't have that normalized level of expense growth. You'll have that uptick each time.

And then, beyond that, basically, expenses were essentially flat but for some expenses, as Chandler alluded to around -- we had retention plans in place during the Sinclair deal and the board concluded it made sense to continue to pay those out as we had kept people here for 15 months and needed them to stay and continue to drive our business. So, we paid those in the third quarter, which was a little bit of an anomaly in our corporate and broadcast expense.

So, I would say, essentially, expenses were flat but for that little uptick that I just around retention. Or would have been flat, and then you've got the network affiliation uptick from the local TV deal, and you've got the noise around write-offs. So, that's really the puzzle.

Kyle Evans -- Stephens, Inc. -- Analyst

Great. On the core side, I think your release referenced positive ex-political crowd-out effects that's markedly better than peers. Can you help us understand what's driving that and maybe highlight, if any, WGNA's impact there?

Peter Kern -- Chief Executive Officer, Director

Well, I think WGNA's impact was positive but small. Not enough to make it positive or negative. As far as our station group goes, I think, look, the second half has been markedly better in terms of core. Auto is considerably better than it has been. Other categories have improved. I think, by our reading of the peer group, they may have somewhat more crowding out effect in certain markets than we had and may have had something like what we're seeing in core, but for more crowding out.

So, we're not exactly sure -- it's not perfect science, the crowding out math -- but I think we're seeing a quite solid core in the third quarter. And I will say, we did see a particularly tough first half for our large markets where our peers are not exposed. And those markets have come back considerably, so our swings may be slightly different than our peers who are more exposed to small markets. So, the delta may seem bigger. I think, in general, everybody's seeing a much firmer core, both national and local, in the back half. And hopefully our share gains and other things are helping us do a little better, but we're not declaring world dominance or anything. We had a nice quarter and we're pleased with it. I think we're pretty reflective and maybe slightly better in core just because of how our markets are arranged and some share gains.

Kyle Evans -- Stephens, Inc. -- Analyst

As a follow-on, can you -- maybe a brief comment on 4Q pacing on core? Thank you.

Chandler Bigelow -- Executive Vice President and Chief Financial Officer

Yeah, Kyle, Fourth Quarter's pacing down mid-single digits, which I would note is a much better pace than the Fourth Quarter 2016. And we have more political spend in the Fourth Quarter of '18 versus '16, and as we mentioned, when we adjust for our estimate of displacement, we think the Fourth Quarter core is actually up and I'd tell you that November and December are pacing pretty well. So, like Peter said, we're very encouraged by the pace of core in the second half of the year, especially versus the first half.

Kyle Evans - Stephens -- Analyst

Thank you.

Operator

The next question comes from Craig Huber of Huber Research Partners. Please go ahead.

Craig Huber - Huber Research Partners -- Analyst

Yes, hi, good morning. Thanks. A few questions. My first one is, what's your best sense of the FCC, when or if they may address the 39% ownership cap with a 50% UHF discount? Sort of, best sense of what the timing is on that.

Eddie Lazarus -- Executive Vice President, General Counsel and Chief Strategy Officer

I don't think we have any special insight into it. We certainly don't anticipate it being this year, and we're comfortable that whatever decisions the FCC chair makes will allow for a nice consolidation within the industry and that's a welcome event.

Craig Huber - Huber Research Partners -- Analyst

And also, given the cash balance on your balance sheet, you're also under-levered, relative to your peers, certainly, your public peers. What's your appetite right now for acquisitions?

Peter Kern -- Chief Executive Officer, Director

 

Yeah, I would say that we like where our balance sheet sits. We're certainly thinking about a lot of options about how we use our capital and whether it's returning capital to shareholders, and other things which we have done historically. But, right now, we think the industry is poised, as Eddie just said, for further consolidation. We certainly believe that we should either be a consolidator or a consolidatee, and we are looking at all of those options all the time. So, I think, we certainly do have an appetite and have been looking and are interested in what's available on the market. And I think, as some of our peers said on their calls, there is a pipeline of things small and large coming down the path and you can assume we look at all of that.

Craig Huber - Huber Research Partners -- Analyst

I'm also curious, given the cash balance again on the balance sheet, you guys did not buy back any stock this last quarter despite your stock collapsing after the deal with Sinclair did not go through. Just curious why you guys did not buy back any stock.

Peter Kern -- Chief Executive Officer, Director

Yeah, I think we, perhaps, take a more holistic view of long-term shareholder value, which is to say we didn't feel compelled to try to prop the stock up in the short term. The stock's performed quite nicely based on our results, and we're pleased with that. But we did not want to have sort of a knee-jerk response to, "Oh, the deal fell out. What do we think? What do we know?" We wanted to evaluate the landscape, decide what to do with our capital -- if it would be better spent on acquisitions or larger returns of capital, etc., which we are still evaluating closely with our board. That was our approach, so we had less of the, "Oh, the deal fell out. That means our stock is too cheap." Whatever, our stock found its level pretty quickly and our performance is obviously helping with that, and we don't want to have that knee-jerk reaction to let's buy it back or try to keep the price up. We want to keep our capital available to do the most strategic things that add value to the share price long-term, essentially.

Craig Huber - Huber Research Partners -- Analyst

And then my one fundamental question, if I could. Can you just give us a breakdown by year of the percent of your retrans subs up for renewal in 2018, 2019, and 2020? And are they all back and weighted for each of those years?

Chandler Bigelow -- Executive Vice President and Chief Financial Officer

We don't get into the details of our retrans agreements at that level. I think what we've said in the conference call, that over the next 14 months we have more than 50% of our footprint out.

Craig Huber - Huber Research Partners -- Analyst

Can you maybe at least tell us what percentage in 2018 out of that? Or 2019?

Peter Kern -- Chief Executive Officer, Director

Well, none of it will affect this year's numbers, if at all later this year or next year. And obviously, the further into next year it goes, the less impact it has on next year's numbers. But I think it's safe to assume, as I alluded to, that we believe we have ample room for growth and continued growth, and that these deals will continue and prolong. And I think we feel quite good about that.

Craig Huber - Huber Research Partners -- Analyst

I'm so sorry to push on this, but can you just maybe help us a little bit for modeling purposes? Like, what percentage is up in calendar 2019, for example, please?

Peter Kern -- Chief Executive Officer, Director

Yeah, we haven't really given that out, so I apologize for being elusive. But we haven't gone down to that granularity and I think, as Eddie says, half our footprint's up -- or as Lou said in our comments -- half our footprint's up in the next 14 months. You can easily figure out when the next 14 months runs out and these deals tend to be at specific dates, not random dates throughout the year. So, I think half our retrans have a chance to reset upwards and reset growth trajectories upwards over the next 14 months, so into 2020. You can assume that whatever you believe our potential uptick is related to half our base, that's fairly significant.

Craig Huber - Huber Research Partners -- Analyst

Okay. Thanks, guys.

Peter Kern -- Chief Executive Officer, Director

Thank you.

Operator

The next question comes from Marcy Ryvicker of Wolf Research. Please go ahead.

Marci Ryvicker -- Wolfe Research, LLC -- Analyst

Thanks. I want to start with expenses first. You've done a phenomenal job of taking all the excess costs out of the business, and I guess, going forward into 2019, is it safe to assume that your non-programming cost basis is probably as lean as it's going to get, so we should just grow below single-digits off of the 2018 cost basis? And then, on the programming side, is there anything we need to think about from a seasonality perspective as it relates to WGN America?

Peter Kern -- Chief Executive Officer, Director

So, hi Marci. Thanks for the question. So, two things I would say: 1) no to question 1. There's certainly more efficiency to be found in the business, I think, as we continue to simplify the business. As we continue to become a pure broadcast service with less ancillary things going on, and as we continue to combine corporate and look at corporate and broadcast overhead, etc. together and find new efficiencies in broadcasting. There is still room -- I believe not insignificant room -- to keep going using best practices across all of those categories.

So, we will continue to drive that in a thoughtful way that is not overly debilitating or anything, but we think there's room to keep going there, for sure. And as far as WGNA goes, there's nothing really seasonal anymore. We don't have these super-expensive hit in a quarter kind of things. We've got a regular sort of rhythm of original programming that's coming throughout the year and we've got acquired programming and other things. We do think there's opportunity in the future as more of these lesser-performing shows that we've owned for a while start to roll up to use the same money to perform even better. And we're not looking to peel more costs, necessarily, out of programming anywhere, but we don't expect any seasonality or spikes that you would notice.

Marci Ryvicker -- Wolfe Research, LLC -- Analyst

Okay. And then on monetization of the real estate. It sounds like Chicago's the very last big piece. Can you just tell us where you are today versus the $1 billion that was talked about at the beginning of your listed monetization plans?

Peter Kern -- Chief Executive Officer, Director

So, I'll do the first bit and Chandler can do the second bit. On the first bit, yes, Chicago is our biggest and most glorious remaining real estate property and makes it the largest chunk of what remains. But it is not our only property. We retain a significant property in downtown Los Angeles, and some participation in certain other smaller real estate deals we've done in the past. So, there is more real estate money besides Chicago. And I'll let Chandler reflect on the billion dollars.

Chandler Bigelow -- Executive Vice President and Chief Financial Officer

Yeah. Marci, since we've started (inaudible) the real estate about 4 years ago, we've grossed about $775 million of gross proceeds, and we think the remaining portfolio is in the $450 million of gross proceeds range.

Marci Ryvicker -- Wolfe Research, LLC -- Analyst

Oh, OK. And then my very last question -- any update on timing of the Sinclair lawsuit and, I don't know if you can comment, but any conversation about the potential settlement?

Chandler Bigelow -- Executive Vice President and Chief Financial Officer

Look, we feel really strongly about our breach case against Sinclair. We're going to pursue it aggressively. It's going to move into the discovery phase now. There's no update on timing. That's going to run probably another 18 months or something like that. And so, other than that, there's new.

Marci Ryvicker -- Wolfe Research, LLC -- Analyst

Great. Thank you so much.

Peter Kern -- Chief Executive Officer, Director

Thank you, Marci.

Operator

Again, if you have a question please press * then 1 on a touchtone phone. Please stand by as we poll for questions.

Peter Kern -- Chief Executive Officer, Director

Okay, thank you, everybody. Appreciate it. It sounds like we ran out of questions. Have a good day. We'll talk to you all soon. Thanks.

 

 

Operator

Again, this concludes today's Q and A session and the Tribune Media Company Third Quarter 2018 Earnings Conference Call. Thank you for attending today's presentation. You may now disconnect.

Duration: 39 minutes

Call participants:

Gary Weitman -- Senior Vice President, Corporate Relations

 

Peter Kern -- Chief Executive Officer, Director

 

Chandler Bigelow -- Chief Financial Officer, Executive Vice President

Eddie Lazarus -- Executive Vice President, General Counsel and Chief Strategy Officer

David Joyce - Evercore ISI -- Analyst

Kyle Evans -- Stephens, Inc. -- Analyst

Craig Huber - Huber Research Partners -- Analyst

Marci Ryvicker -- Wolfe Research, LLC -- Analyst

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