Sinclair, Inc.

Good day, everyone, and welcome to the Sinclair second quarter 2026 earnings conference call. At this time, all participants are placed on a listen-only mode. If you have any questions or comments during the presentation, you may press star 1 on your phone to enter the question queue at any time, and we will open the floor for your questions and comments after the presentation. It is now my pleasure to hand the floor over to your host, Chris King, Vice President of Investor Relations. Sir, the floor is yours.

Good afternoon, everyone, and thank you for joining Sinclair's second quarter 2026 earnings conference call. Joining me on the call today are Chris Ripley, our president and chief executive officer, Narinder Sahai, 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 the slides for today's earnings call are available on our website, sbgi.net. on the events and presentations 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 several risks and uncertainties. Actual results in the future could differ from those described in the forward-looking statements because 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 second quarter earnings release. The company undertakes no obligation to update these forward-looking statements. Including 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. Please note that unless otherwise noted, all year-over-year comparisons throughout today's call are presented on an as-reported basis. Let me now turn the call over to Chris Ripley.

Thank you, Chris, and good afternoon, everyone. Let me begin on slide three. We delivered a strong second quarter with results that reflected the early strength of the 2026 political cycle continued distribution revenue growth and disciplined execution across the business. For the quarter, total revenue was $840 million, up 7% year-over-year, while adjusted EBITDA was $149 million, up 45%. Growth was led by political advertising, and the early pace of demand reinforces our confidence in the strength of the cycle and the value of our broad station footprint in many of the country's most competitive races. Distribution revenue continued to grow, supported by the partner station buy-ins completed over the past year. The combination of broadcast, connected television, digital, and podcast inventory continues to expand the solutions we offer advertisers and positions us well as political demand builds through the remainder of the year. Core advertising was softer, as we expected, reflecting record political demand crowding out inventory in our most competitive markets and and a handful of cost-pressured advertiser categories. Narinder will take you through the details. LiveSports once again demonstrated the reach of broadcast television led by record World Cup audiences on Fox. Rob will take you through that shortly. Tennis Channel also sustained its audience momentum with growth across its linear, direct-to-consumer Tennis Channel 2 and Pickleball TV platforms. Within Ventures, The portfolio continued to generate cash distributions and ended the quarter with 489 million cash on hand. That liquidity continues to provide meaningful flexibility as we evaluate opportunities across the portfolio and advance our broader strategic priorities. We also made substantial progress on deleveraging as we repaid or retired approximately 320 million of debt in the quarter. Deleveraging our balance sheet remains our top priority for the company. Based on our first half performance and current outlook, we are increasing our full year adjusted EBITDA and political advertising guidance. Narinder will discuss the updated outlook in more detail later in the call. On slide four, we highlight that we expect, what we expect to be a historic day for the broadcast industry tomorrow with the expectation of an FCC vote to remove the national ownership cap of 39%. A development that the industry has been supporting for many years The removal of the national ownership cap would set the stage for broadcasters to be able to compete on a more level playing field as the industry finds itself competing against big tech and streamers that are not subjected to comparable regulatory constraints It would strengthen broadcasters' ability to invest in local news across the country as we continue to serve our local communities As we continue our strategic review process, the increased clarity and support from an improved regulatory environment could help facilitate M&A activity across the industry. Sinclair is well prepared to participate in value-creating consolidation, and we will remain disciplined in how and when we do so. The slide also summarizes the other proceedings moving in the same constructive direction, the ATSC 3.0 transition, The Network Affiliation Review, and Modernized Local Ownership Rules. With that, let me turn the call over to Rob to discuss our operating highlights in more detail.

Thank you, Chris, and good afternoon, everyone. Turning to slide five, the 2026 midterm election cycle is off to a strong start across our footprint. We operate in all of the top 10 states currently projected to receive the highest levels of political advertising and spending. Importantly, these states include six competitive Senate, seven competitive gubernatorial, and 33 competitive House races, according to a recent standard of force analysis. That combination of geographic reach, local audience scale, and competitive races positions us well as campaign spending expands through the second half of the year. Second quarter political revenue of $59 million was 9% above the second quarter of 2022. Demand has been broad-based across our markets, with candidates, parties, and issue advertisers beginning the reserve inventory earlier in the cycle. Recent changes to campaign finance rules are also enabling party committees to invest earlier and at greater scale. Given the strength we have seen to date, and the current outlook for competitive races across our footprint, we are increasing full-year political advertising revenue guidance to at least $375 million. Narinder will take you through the updated outlook. Political spending is always back and loaded towards the weeks immediately preceding Election Day, and timing can vary by race and market. However, the early activity we are seeing supports our expectation for a robust cycle and underscores the differentiated value of local broadcast television for reaching voters at scale. Turning to slide six, the FIFA World Cup provided another clear example of the power of broadcast-led live sports and the value of our Fox affiliate portfolio. The tournament delivered record soccer audiences on broadcast and generated strong advertising demand across our local markets. For some perspective, 128.4 million Americans watched some portion of the World Cup on Fox, FS1, and Tubi, and the World Cup final drew an audience of 66.4 million viewers, which was the largest U.S. audience for any non-Super Bowl sports event in more than 30 years. Sinclair took this opportunity to expand well beyond the linear broadcast. Ant Media brands allowed advertisers to add targeted Cross-platform Reach, while our unfiltered soccer podcast featuring Landon Donovan and Tim Howard gave brands another way to engage highly interested soccer fans around the tournament. In addition, three live activations around the World Cup let consumers physically experience our advertisers' products, deepening engagement with their campaigns. This coordinated approach across broadcast, digital, and podcast platforms is increasingly important to advertisers. Broadcast provides mass reach and live engagement, while our digital capabilities, along with live activations, add audience targeting, frequency, and measurable extensions beyond the telecast. Pre-live sports remain one of the most powerful drivers of appointment viewing, and broadcast delivers that content with unmatched reach. As we head into third quarter, We look to build on the World Cup successes with the return of college football and the NFL. Our operational takeaways on slide seven highlight the strong early political demand across our markets during the quarter. With political revenue ahead of the comparable 2022 period, our broad station footprint, local sales relationships, and expanding digital capabilities position as well, as campaign activity builds through the remainder of the cycle. Distribution also remains solid, supported by our partner station, Buyins. The value of broadcast remains clear, particularly around live news, premium sports, and other programming that consistently brings audience together at scale. Advertisers are increasingly looking for integrated campaigns that combine the broad reach and live engagement of broadcasts with the targeting and measurement available through digital. Our portfolio allows us to deliver both, creating more value for the advertiser while deepening engagement with audiences across platforms. Client demand is consolidating total video. We're linear in streaming thought together, and that is exactly what we have built towards. The World Cup was the template for broadcast reach, streaming, digital podcasts, and Live Activations sold as integrated campaigns. Across the business, we remain disciplined on expenses while continuing to support the content, technology and sales capabilities that can drive long-term growth. In summary, strong early political demand, expanding cross-platform capabilities and the audience strength of broadcast-led live sports positioned us well for the second half of the year. With that, let me turn the call over to Narinder to review the second quarter financial results and our updated outlook.

Narinder Sahai, Thank you, Rob, and good afternoon, everyone. Turning to slide eight, I will walk through the second quarter financial results in more detail. At the total company level, revenue was $840 million, up 7 percent year over year. The increase was driven primarily by political advertising and continued distribution revenue growth. Adjusted EBITDA was $149 million, up 45%, reflecting the favorable revenue mix and disciplined expense management. Political advertising revenue of $59 million was the largest contributor to growth, up 9% from the second quarter of 2022, our strongest prior midterm cycle. Distribution revenue increased 2%, with subscriber churn continuing to moderate, consistent with trends the largest distributors have reported publicly, and the benefit of partner station buy-ins we have executed. Core advertising revenue declined 3%. Two things are worth keeping in mind. First, this was the first quarter with a full prior year comparison for Digital Remedy. which we acquired in March of 2025. That anniversary affects the year-over-year comparison. Second, on the demand backdrop, consumer spending held up in the quarter, but the fuel and tariff volatility clearly made advertisers more cautious. The pressure we saw was concentrated due to political crowd out and in categories where cost inflation is squeezing the advertiser budget. In the local media segment, total revenue was $731 million, an increase of 8% year-over-year. Local media adjusted EBITDA was $149 million, up 51% year-over-year. The increase reflects strong political revenue and continued cost discipline across programming, production, and selling general and administrative expenses. Within the tennis segment, Total revenue was $70 million, up from $68 million in the prior year quarter. Advertising revenue increased 8%, supported by ratings growth and continued direct-to-consumer momentum, while distribution revenue increased 2%. Tennis segment adjusted EBITDA was $8 million, compared with $13 million in the prior year quarter. The decline primarily reflects higher programming and production costs as we continue to strengthen and monetize our rights portfolio and ongoing investment in a direct-to-consumer platform. On slide 9, we are updating our full year 2026 guidance. I will start with what is changing, which is political advertising revenue, core advertising revenue, and adjusted EBITDA, then cover what is not changing. and close with the key free cash flow items. As Rob discussed, we are increasing political advertising revenue guidance to at least $375 million from at least $333 million previously. This 13% increase takes our guidance above the 2022 record and reflects strong first half demand and the current outlook for competitive Senate, gubernatorial and House races across our footprint. We are resetting our core advertising revenue guidance, which is now expected to be between $1.22 billion and $1.28 billion for total company, while local media core advertising revenue is expected to be between $1.04 billion and $1.09 billion. This represents a reduction of $40 million at the midpoint of prior guidance ranges. On our last call, we said that if current conditions persisted, we would reassess our core advertising outlook. This revision now reflects the expected crowd out from an elevated political spending in the second half, and it resets second half core advertising to the demand levels we are currently seeing with no improvement assumed through year end. Despite the change in core advertising expectations, We are increasing adjusted EBITDA guidance by $25 million at the midpoint on the strength of our first half performance. Our updated guidance now includes the transition of our St. Louis ABC affiliation at the end of August in our guidance for the remainder of the year. Even after accounting for St. Louis, the new midpoint of our adjusted EBITDA guidance is above the high end of our prior range. reflecting the improved political forecast and our continued expense discipline across the company. Total company adjusted EBITDA is now expected to be between $730 million and $760 million. Local media adjusted EBITDA is now expected to be between $710 million and $740 million. Now moving to what is not changing. We are maintaining total company revenue guidance and many others. Finally, turning to key are three cash flow components. Our capital expenditure forecast is unchanged at $75 million to $80 million. We are lowering our net interest expense guidance to be between $295 million and $290 million, reflecting the deleveraging activities we have completed to date. And our net cash tax guidance is now approximately $50 million, a function of higher expected pre-tax income in an expected record midterm political year. Taken together, our updated guidance reflects our current expectations for the full year. Turning to slide 10, we continue to make meaningful progress on our deleveraging priorities during and immediately following the quarter. As Chris referenced, during the second quarter, we reduced our debt balance by approximately $320 million. That included the $165 million of term loans we repurchased through the reverse Dutch auction discussed on our last call, $150 million of repayment on our accounts receivable facility, and roughly $5 million of scheduled amortization and finance lease payments. In July, after quarter end, we repurchased and retired an additional $25 million saved amount of our B-7 term loan at a discount, and repaid and terminated the remaining B3 term loan balance. These actions have improved our maturity profile and reduced our interest expense, directly benefiting our cash flow. At quarter end, total debt was approximately $4.1 billion. Our nearest material maturity, excluding the accounts receivable facility, remains in December of 2029, providing us with a manageable runway to continue executing our deleveraging plans. Sinclair Television Group, or STG, net leverage ended the quarter at 5.2 times. And with the heaviest political quarters still ahead of us, we expect continued progress through the balance of the year. We ended the quarter with $604 million of consolidated cash and cash equivalents, including $115 million at STG and $489 million at Ventures. Ventures generated $19 million of cash distributions from its portfolio during the quarter. Including undrawn revolver and AR facility capacity, total liquidity was approximately $1.4 billion. We remain focused on reducing debt and improving leverage over time while maintaining sufficient liquidity to operate the business and invest selectively in high return opportunities. With that, Let me turn the call back to Chris for a community update and closing comments.

Thank you, Narinder. Before wrapping up, I want to recognize our employees and the impact they made through the 2026 Sinclair Day of Service highlighted on slide 11. More than 1,200 employees contributed a combined 3,070 hours of service across our markets and cities. Their work supported a wide range of local needs, including food security, hygiene assistance, Accessibility Resources, and Animal Welfare. Enriching local lives is central to who we are as a company. Our stations and employees live in the communities they serve, and I'm proud of the time, energy, and care they contributed through this year's Day of Service. As we wrap up on slide 12, let me briefly summarize our second quarter and outlook. First, the 2026 political cycle is off to a strong start. The second quarter political revenue highlights, the value of our broad local footprint and the demand we are seeing across competitive races supports our increased full-year political guidance. We also enter what we expect to be a more constructive regulatory era for local broadcast and we are preparing for it. Broadcast-led live sports continue to deliver premium audiences at scale. The FIFA World Cup on Fox generated record and many more. Based on our first half results and current outlook, we increased full-year adjusted EBITDA guidance despite a more cautious view of the core advertising environment. Lastly, deleveraging remains a top priority as illustrated through our actions during and immediately following the quarter. These actions are reducing interest expense and strengthening our financial position. We enter the second half of the year with strong political momentum A valuable live sports programming schedule, expanded cross-platform capabilities, meaningful strategic optionality, and a continued focus on cost discipline and debt reduction. With that, operator, we are ready to open the line for questions.

Certainly. Everyone at this time will be conducting a question-and-answer session. If you have any questions or comments, please press star 1 on your phone at this time. We do ask that while posing your question, please pick up your handset if you're listening on speakerphone to provide optimum sound quality. And once again, if you have any questions or comments, please press star 1 on your phone. Your first question is coming from Dan Kernos from Stone X. Your line is live. Great. Thanks. Good afternoon.

Chris, you get the first crack at upcoming FCC cap repeal and any comments you want to make, it seems likely tomorrow. So little premature, but, you know, we've obviously been talking M&A in the space for a long time. Do you think that changes the conversation? Number one. And number two, your guidance is just shy now. I think 25 or 30 million of your 24 political numbers. So what are you seeing? How much conservatism? It's still early. Just maybe unpack some of the pieces would be great. Thank you.

Okay. I'll let Rob speak to what he's seeing on the political ad front. But in terms of the cap elimination, which is expected tomorrow, I mean, we couldn't be Thank you for joining us. and we expect that some of the counterparties that we are interested in will be more likely to want to transact with this certainty put on the books.

In regards to the political, we've taken it up significantly. The last guide was $333 million. The guide now is $375 million. And as we get closer into election day, will have a better indication of what races will remain hot and where that funding is going. In 24, we saw some funding in Pennsylvania move to the bigger cities of Philly and Pittsburgh, where early on in the pre-race it was spread out throughout the state. So today we're comfortable at that 375 guidance, and we'll have more clarity within the next four weeks. But we feel very comfortable that we can handle this demand.

Yeah, and Dan, I'd just add to that, the intensity of the political ad spend, it almost doubles every quarter. And in the fourth quarter, you only have a half a quarter, essentially, of political ad spending, and it So it really is hard to predict how you will ultimately end up with everything being as back-end loaded as it is. But what we're seeing so far, we were comfortable meaningfully increasing our guidance.

Super helpful. Thanks, guys, and congrats on the print.

Thank you. Thank you.

Thank you. Your next question is coming from Benjamin Soft from Deutsche Bank. Your line is live.

Good afternoon. Thanks for the question. I'm wondering how you expect the recent ruling from the Supreme Court on lowest unit pricing for political party spending could impact your business either this year or in the future. And then on Tuck and M&A, you've recently closed your buy-in transactions, and I'm wondering how you think about the opportunity set for more Tuck and M&A. Are there any types of assets or markets that are attractive right now? How do you think about balancing doing smaller deals versus your focus on larger consolidation? Thank you.

So I'll handle the political question. Our outlook for this year already takes into account the ruling. Something to note is this ruling only affects 60 days out from the election. And in 2024, it was mid-single digits that were came from the party spending. If we see an increase in that spending, our yield team will adjust rates on the fly based on the demand and our capacity still will be able to handle the volume of dollars being spent this year and historically as that spending has increased, we will be able to handle it.

And look, on the M&A front, overall, you know, we see the Environment, and of course, you know, led by regulatory being increasingly constructive for all sorts of M&A. As I mentioned in my prepared remarks, there is additional local ownership easing, which is in the pipeline tied to the quadrennial review. So that's another, you know, key point. rule change that we're tracking closely here and will be very helpful in terms of local market consolidation. So in terms of the opportunity set, I do think the elimination of the cap will make large scale M&A much easier and less risky. And we're going to be redoubling our efforts in that area. In the meantime, we've done some smaller market-by-market optimization deals recently, such as in Tulsa. And we have a very full pipeline of additional opportunities on the smaller side where we're going market-by-market, looking at swaps and looking at ways to double up and sometimes triple up. And those are very accretive transactions. So we are... We are pursuing those quite extensively. The cap obviously does not implicate those opportunities, but we are still prioritizing them as well as redoubling our efforts on a large-scale front.

Got it. Thank you.

Thank you. Your next question is coming from Stephen Cahill from Wells Fargo. Your line is live.

Thank you. Three, if you don't mind. First, just on the political guide, I think you're now at least 13% over 2022. How do we think about that in terms of what's being driven by some of the idiosyncrasies of this election cycle or some of the consolidation that you've just done versus just the size of the cycle? I'm kind of getting to whether or not 2028 is could be 13% over 2024 or if there's something more special in 2026 that's driving that upside.

Sure. So look, I think our platform is pretty much the same as it was four years prior. There's very little movement in terms of station portfolio. And I believe that the main driver of the increase here that we're Thank you for joining us. That is really the basic formula for political ad spending is money raised equals money spent. And as I like to point out, politicians don't return money to the donors when the elections are over. So it's really the most important factor is money raised, and we're seeing that being done in record levels. Certainly for a midterm, it might even be an all-time record. We'll have to see how the final numbers come in. and I think the read-through to 2028 is very positive.

Yeah, I'll add, by the time 2028 comes around, some of our investments will be content on the digital side as well, full platform, and so we'll be able to capture that money both on the linear and digital side, capturing some of that now, and it'll be even more significant in 2028.

Great. And then, Narinder, I just want to make sure I understand the guidance changes. So is it that political revenue is a little higher margin than core revenue? Is it that you've done better on cost than you thought for the year or a combination of those two things with the EBITDA guide going higher?

Sure. Steve, thank you for the question. Yes, you're absolutely right. There are a few moving pieces here. So if you just compare midpoint of the prior guide to the midpoint of this revised guide on adjusted hepatitis plus 25. And we took up the political by about $42 million, very, very high margin. And then when you look at the reset we have on the core, so there's certainly some offset there. And then when you look at the impact of our St. Louis affiliation transition, That's also factored into the guide. So if you take these three together, that does not take you all the way to 25. So the delta there is the outperformance and the expense management that we have achieved, you know, so far year to date. And we expect that to continue to flow through for the remainder of the year. We are not giving that back.

Great. And then last one, I know you and your peers are pursuing some Spectrum-related business opportunities through EdgeBeam. Historically, in Spectrum, there were three telcos that might have competed to buy that from you at some point. Now, there's another player in this market with more than a trillion market cap. Some days it's two trillion. So you and your peers, it just seems like, are sitting on a resource that has a different scarcity factor than it has historically. How do you think about the opportunities to monetize that low band spectrum and does it have to be done through an auction or are there ways that you can use the EdgeBeam consortium and do something more quickly with some of the new spectrum?

Thanks. Thank you for that question. It's a great question, Steve. It's very encouraging to hear from you and other market participants talking about the underlying value of our spectrum, which we've been big believers in for a long time. And if you dial back the clock to the last auction, which was 2017, it was really a disappointment for the industry because AT&T and Verizon, for reasons I won't expand upon here because it would take too long, decided not to participate in that auction in any meaningful way. So you essentially had two major bidders, which was T-Mobile and DISH. And if you remember, DISH also had some shenanigans working through some entities to get a discount. So it really was not a great outcome for the broadcasters. It ended up having an average price of about $1 per MHz pop. which we think vastly undervalues low band spectrum given its scarcity value and its beachfront location. Really, that was just driven by a lack of competition. Fast forward to today, I think the competitive set on the telecom side has changed. If you did have another auction, it wouldn't just be T-Mobile and showing up or a new entrant like this. I think you'd see competition from the AT&Ts and the Verizons of the world as well. And now, as you alluded to, anyone who has or is planning on launching a LEO constellation is very interested in acquiring low-band spectrum, either acquiring it or acquiring access to it, which I think goes to your second statement, which is How would you go about activating this spectrum for use on those constellations? And that could obviously be achieved through a conventional auction like we did in 2017. It could also be achieved through a negotiated sale, which is another possibility that would be organized with the FCC. and then the final, the third option would be to enter in some sort of a lease arrangement to make capacity available. And so, like I think the macro point is that this spectrum is very valuable. I think it's easily, you know, at market, at auction, at a negotiated sale over $2.50 a megahertz pop I think is It would be a floor valuation that I would see in any sort of transaction, which, by the way, implies $4.1 billion for Sinclair's portfolio in totality. And it also underscores the necessity to fully roll out 3.0 and sunset 1.0, because by sunsetting 1.0, we're able to free up a lot of spectrum, which could be used for additional programming and data casting, which we're working on at Edgebeam. But there is sort of a cost-benefit analysis that I think will go on once we sunset 1.0 and these commercial applications are available that Edgebeam is working on. The industry will have to assess, is it better to run those use cases over that spectrum and earn An annuity stream of income from it, or is it better to transact and sell or lease to someone like Starlink? And so I think all of those are possibilities, and it's really just an economic equation, and it reinforces to me and the rest of the industry that we need to get the FCC to act and approve the NPRM in front of them on 3.0 and Sunset 1.0 in order to open up these types of opportunities.

Great. Thank you. Thank you. Your next question is coming from Aaron Watts from Deutsche Bank. Your line is live.

Hi. Thanks for having me on. I covered a lot of ground already. Chris, I had a follow-up around the FCC and the national ownership cap change. Curious how you're thinking about the practical timing of the industry being able to act on the changes that we may see come tomorrow and in the near future, especially in light of how other media consolidation processes are playing out and the expected or potential challenges that may be raised in the courts.

So once a vote happens, it does take some amount of time to go into the registry where it becomes officially I think it's something around 30 days or so, but don't quote me on that. And after that, that's the law of the land, so to speak. We fully expect people to challenge this order, and we think the FCC is on solid legal ground here in terms of have their authority to change this rule and the rationale behind changing it in terms of the FCC's mandate is to deregulate over time. That was the mandate from Congress as conditions change, and that's what's happening here. So we'll be able to transact under this new rule shortly after the vote happens, as soon as it gets into the federal registry.

Okay, that's really helpful, thanks. And maybe one for Rob, potentially, but I know you touched on some weakness in some of your core categories. Can you highlight a little bit more about your top categories and how they're trending plus or minus right now? And are the ones that are a little softer at the moment just really a reflection of the macro uncertainties?

Yeah. I'll start with automotive. An automotive is flat year over year, and that trend continues, which means it's a great sign through these macroeconomics that automotive spending remains equal to last year. Sports betting and legal were categories that helped drive the quarter, while services and medical were the downtrending top categories.

Perfect. Thanks again, guys.

Thank you. That concludes our Q&A session. I'll now hand the conference back to Chris Ripley, President and Chief Executive Officer, for closing remarks. Please go ahead.

Thank you once again for joining us for our Q2 earnings call. If you have any follow-ups or questions, please don't hesitate to reach out to

Everyone, this concludes today's event. You may disconnect at this time and have a wonderful day. Thank you for your participation.