Sinclair, Inc.

Greetings and welcome to the Sinclair Inc third quarter 2024 earnings conference call. At this time all participants are on a listen only mode and a question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference please press star zero on your telephone keypad. Please note, this conference is being recorded. I will now turn the conference over to your host, Chris King, Vice President of Investor Relations. Chris, you may begin.

Thank you. Good afternoon, everyone, and thank you for joining Sinclair's third 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 Weisbord, our Chief Operating Officer and President of Local Media. Before we begin, I want to remind everyone that slides for today's earnings call are available on our website, sbgi.net, on the events and presentation page of the investor relations portion of the site. A webcast replay will remain available on our website until our next quarterly earnings release. 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 third quarter earnings release. The company undertakes no obligation to update these forward-looking statements. Included on the call 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. Let me now turn the call over to Chris Ripley.

Good afternoon, everyone, and thank you for joining us. I'll start on slide three by highlighting our third quarter financial results on a consolidated basis. We delivered solid third quarter results that were well above our guidance given in August, but came in modestly below the increased guidance that we provided in mid-September. We were impacted by some late political ad cancellations from Nevada, which occurred in the last week of the third quarter as campaigns moved monies to states and cities outside of our footprint where races grew tighter. Total distribution revenue was in line with our guidance range, thanks to solid outcomes on all distribution renewals. Core advertising revenues grew 1% in the third quarter, which is a first for Sinclair to have grown core at a time when political advertising was at an all-time high. Our sales teams delivered strong growth in both core and political advertising, which followed through to our adjusted EBITDA, which came in near the high end of our guidance range for the quarter. Lucy will go into more details in a moment. On slide four, our ventures portfolio received $5 million in total distributions during the quarter and made approximately $7 million in contributions. At quarter end, ventures held $334 million in cash, up $8 million from cash levels at the end of the second quarter. Turning to slide five, I wanted to take a minute to provide an update to the great rebundling thesis regarding the future of broadcast TV. which may better be termed as the great revaluing as the value proposition of pay TV has significantly improved for the consumer. In recent quarters, we've seen Charter reach deals with Disney, Comcast, Paramount, Warner Brothers Discovery to include streaming services in their cable TV packages. These streaming concessions are now a key part of MVPD content negotiations. and represent a significant value to traditional MVPD subscribers. In fact, chartered customers now receive more than $78 per month worth of streaming services for free in their Select Plus bundle, including Tennis Channel Plus. Not only does this accrete significant value to subscribers with the inclusion of these various premium streaming platforms, but it also significantly lowers the net effective rate for the traditional pay TV bundle of broadcast plus cable channels. In fact, in the case of Charter, we estimate that subscribers are now paying less than $40 a month for broadcast channels and traditional cable networks after factoring in the value of discounts and streaming platforms. This is a 63% discount from what Charter subscribers were paying for broadcasting cable channels just a year ago and is a 49% discount over YouTube TV's base plan for essentially the same channels. As you can see on the slide, we believe the value proposition of the broadcast channels are only increasing for MVPD customers. I was also very pleased to see that Charter is planning a major marketing push next year to promote the more than 10 streaming services it is offering at no additional cost to customers. We are now seeing similar dynamics at play with the recent DirecTV Disney deal, as well as the charter Warner Brothers Discovery deal, which took place a year early. And turning to slide six, we're beginning to see the results of this great rebundling. This data, which comes from Nielsen's monthly The Gauge report, shows the percentage of viewing minutes by platform on a monthly basis. What this chart shows is that broadcast market share has grown each of the past two months and is now relatively flat with the year-ago figure. Broadcast share of viewing minutes has increased by 230 basis points over the past two months, while every other medium has lost share over the same timeframe. Broadcast viewership growth has been driven, at least in part, by live sports content on broadcast networks, such as the Summer Olympics in both NFL and college football, which is why we're excited to continue to see more and more live sports rights moving back to broadcast TV, and we're constantly looking for ways to work with MVPDs to emphasize this value for subscribers. Turning to slide seven, the broadcast industry continues to increase its sports content. Recently, Disney added six more Monday night football games to ABC's programming, which will now have a total of 14 regular and postseason games televised on the network this season. In addition, during the quarter, we announced a partnership with the Portland Trailblazers to launch the Rift City Television Network and BlazorVision, which will carry 65 to 80 Blazer games in the upcoming season. The Trailblazers join the Utah Jazz with the vast majority of their telecasts on Sinclair stations this season. Notably, the Jazz and the Trailblazers join a long list of professional teams that have reached deals with over-the-air broadcast stations within the past couple of months in all major sports across the country. We believe this only supports the idea that broadcast television continues to be one of the most important mediums in the video industry today. In fact, we are excited to see the announcement that Fox, recently sold out its Super Bowl inventory for its February game more than three months early. As Fox is our largest network affiliation, we are looking forward to broadcasting the game and the remainder of the NFL regular season and playoffs. Let me now turn the call over to Rob Weisbord to go over some additional details about our distribution progress, as well as political advertising and exciting updates on our recent podcast launches.