Sinclair, Inc.

Good afternoon everyone and welcome to Sinclair's first quarter 2024 earnings conference call. At this time all participants have been placed on a listen-only mode and the floor will be open for questions after the presentation. If anyone should require operator assistance during this conference please press star zero on your phone keypad. Please note this conference is being recorded. I will now turn the conference over to your host Chris King, VP of Investor Relations Chris, you may begin.

Thank you. Good afternoon, everyone, and thank you for joining Sinclair's first quarter 2024 earnings conference call. Joining me on the call today are Chris Ripley, our President and Chief Executive Officer, Lucy Rudishauser, our Executive Vice President and Chief Financial Officer, and Rob Weisborn, our Chief Operating Officer and President of Local Media. Before we begin, I want to remind everyone that slides and supplemental information for today's earnings call are available on our website, sbgi.net, on the investor information page, and on the earnings webcast page. Certain matters discussed on this call may include forward-looking statements regarding, among other things, future operating results. Such statements are subject to a number of risks and uncertainties. Actual results in the future could differ from those described in the forward-looking statements as a result of various important factors. Such factors have been set forth in the company's most recent reports as filed with the SEC and included in our first quarter earnings release. The company undertakes no obligation to update these forward-looking statements. The company uses its website as a key source of company information, which can be accessed at www.sbti.net. In accordance with Regulation FD, this call is being made available to the public. A webcast replay will be available on our website and will remain available until our next quarterly earnings release. Included on the call today will be a discussion of non-GAAP financial measures, specifically adjusted EBITDA. This measure is not formulated in accordance with GAAP and is not meant to replace GAAP measurements. and may differ from other companies' uses or formulations. Further discussions and reconciliations of the company's non-GAAP financial measures to comparable GAAP financial measures can be found on our website. Finally, we note that the presentation of certain information in our first quarter investor presentation may have changed from prior quarterly investor presentations. We also expect that the presentation of certain information in our second quarter earnings release, conference call, and investor presentation will differ from our first quarter presentation due to an ongoing routine comment process with the Securities and Exchange Commission that we believe other publicly traded broadcasters are currently engaged in as well. Let me now turn the call over to Chris Ridley.

Good afternoon, everyone, and thank you for joining us. I'll start on slide four by introducing an overview of our first quarter financial results. As you can see, Sinclair delivered strong, solid first quarter results that met our guidance expectations in our local media segment, while Tennis Channel exceeded expectations for adjusted EBITDA. Within local media, our distribution revenue came in slightly above the top end of our guidance range, while advertising revenue was slightly below the low end of our range. As a result, we were comfortably within the consolidated guidance ranges for total revenues and adjusted EBITDA. Turning to slide five, I wanted to highlight our strong commitment to our stakeholders through our return of cash. Since the beginning of 2024, we have paid approximately $16 million to shareholders through our regular quarterly dividend, which has a dividend yield of 7% as of March 31st, while also purchasing $27 million of debt in January for approximately $25 million in cash. Since the beginning of 2023, we bought back approximately $91 million in face value of our debt and retired another $35 million through amortization-related payments. In early 2023, we also repurchased nearly 9 million shares of our Class A common stock in addition to the $81 million in dividend payments to our shareholders since the beginning of 2023. Our commitment to maximizing value for all of our stakeholders remains a top priority for the company. Turning to slide six, we remain committed to the transformation of our traditional local media business. We believe Sinclair, as well as the broader industry, has multiple growth drivers. First, excluding the impact of the 2020 Georgia runoff, we expect to see record-breaking political advertising revenues in 2024, which equate to more than $350 million. We continue to see strong political advertising demand and we expect the strong growth of issue-oriented political advertising and what appears to be several close Senate and House races in our footprint to accelerate this growth significantly as we get closer to this year's general election. Given the lack of hyper-competitive primaries, we do expect political advertising spend to be more heavily weighted to the third and fourth quarters as we anticipate most of the spend at the presidential level will be focused on general election. Rob will cover this in more detail shortly. Second, our focus on high demand and differentiated local news and sports content continues to drive strong and loyal viewership, with over 44% of viewer impressions across our station portfolio driven by non-network content. In addition, with nearly all of our Big Four traditional subscribers renewing throughout 2024, We expect a mid single digit net retrans two year CAGR from 2023 to 2025. We have already renewed 42% of our big four traditional network subscribers as of the beginning of May with the remaining renewals coming up throughout the remainder of the year. Next gen broadcasting is becoming a reality as well. We now have 3.0 coverage in over half of our 86 markets and over 75% of the US. In addition, at the NAB conference last month in Las Vegas, we launched BroadSpan Wireless, our next-gen data casting platform with our first go-to-market data casting market partner, Egeo. Turning to slide seven, for years, the broadcast industry, often led by Sinclair, has spoken about next-gen broadcast opportunities that will represent a sea change for the traditional broadcast industry. I'm very pleased to announce that the time for next-gen data distribution opportunity is now. Broadcast data distribution has many benefits, such as a more efficient distribution of mass consumption data, improved customer experience with lower latency and higher quality, and lower cost for data delivery. BroadSpan will use the industry's 3.0 spectrum for data distribution to deliver a suite of data solutions to the market. The platform centralizes data distribution management across multiple stations and markets, allocates spectrum assets without disruption to the existing broadcast services, and collects insights on executed data deliveries. Another business use case focuses on automotive connectivity services, which would allow the distribution of data to vehicles to include over-the-air software updates, live broadcasts and alerts, high fidelity audio, and other features. In addition, Working in partnership with Egeo, we have launched a new content distribution service using streaming video offload, allowing a customer to seamlessly switch between over the air and over the top sources to offload bandwidth intensive traffic from traditional broadband networks. BroadSpan will also be able to deliver precise navigation which is able to achieve up to three centimeters GPS accuracy by augmenting GPS data with real-time kinematic positioning error correction feeds. In addition, the broadcast positioning system, or BPS, is not satellite-based, which can offer crucial redundancies should anything happen to the existing GPS infrastructure that almost every industry relies on heavily today. We could not be more excited regarding the near-term and long-term business opportunities for next-gen broadcast and broadband, and we're focused on remaining an industry leader in this exciting new technology. Turning to slide eight, last week we paid the remaining $445 million to Diamond Sports Group per the settlement with Diamond that we previously announced in January. STD contributed $347 million to the gross settlement figure while Ventures contributed an additional $98 million in addition to the $50 million Ventures paid in March. These allocations were made following discussions between the two independent board of directors of STG and Ventures after considering several different financial metrics, including revenue, assets, income, EBITDA, and free cash flow for the two units, among other considerations. Notably, our net settlement cost estimate remains $250 to $325 million, which reflects income tax benefits, the increase in the MSA fees, and other considerations. Of the net cost estimate, we expect SBG's portion of the total to be approximately 55% to 60%. Now, let me turn it over to Rob to discuss our local media strategy.