Sinclair Broadcast Group, Inc. Class A Stock

With us today, Chris Ripley, CEO of Sinclair Broadcasting and Narinder Sahai, CFO. Thank you for taking the time for joining us today.

It's great to be here.

Great.

Thanks, Marlane.

So to start, obviously, a big thesis to broadcast today is the regulatory environment, the FCC. So the first question is starting with the FCC voting to repeal the 39% ownership cap, could you pursue larger M&A before any legal challenges are resolved?

So the short answer to that is yes. The change in the cap has not hit the federal register yet, but we do expect that to happen shortly. There is already challenge, I think, filed with one of the courts, which was expected. If we were to pursue a transaction that required that rule to have been changed, we would seek a prospective waiver as part of that approval, and that was used in the Nexstar-TEGNA transaction, for instance. And we don't know how the ultimate challenge will play out, but it probably will be over a significant period of time. And we strongly believe the FCC has the better case there in terms of their ability to change the cap. So that will play out over a long period of time, probably through multiple courts. And in the meantime, the ability to transact should be there.

Great. And what do you see as the next gating item to large scale consolidation? Is it financing, valuation, willing counterparties?

Well, we've never had a better regulatory environment for broadcast on the federal side than we have now. You just mentioned the cap being vacated. We also, earlier last year, we had the Top-Four rule be vacated by court ruling. There may be further local ownership loosening in the quadrennial review. And most importantly, we've had a shift in the market definition at the DOJ as evidenced by their approval of the Nexstar-TEGNA transaction with no required divestitures. So it's really a great environment from a federal perspective, but then you also have this new issue that has been emerged by DIRECTV and the state AGs, specifically acute in media affecting Nexstar-TEGNA, but also affecting PSKY, Warner Bros.

And there is -- we've learned a lot from looking at that transaction and how that playbook has been run. And I do think there are ways that we can mitigate that attack vector on future transactions. But it is undoubtedly an additional overhang on large-scale M&A. And then there are -- as you mentioned, sort of counterparties need to be willing, right? Control issues need to be figured out. And so that's the other area within the industry. That's I'd say, preventing bigger deals from hitting the market more than you've seen.

Right. Great. And does the remaining time under the current administration impact your M&A strategy, if at all?

It doesn't impact like undoubtedly, we would love to get large-scale M&A done inside of this administration. We are doubling down right now on market-by-market optimization, and we think there's a lot to be done there. Previously, that wasn't our focus. We were focused on landing a bigger deal, but we have a very robust pipeline of market-by-market discussions there. We think those transactions can be very accretive, where we're generally focused on overlap markets, doubling up and sometimes tripling up. And those will be not only accretive to the equity but also deleveraging.

And so we think there's a lot that can be done in that area over the next 2 years. And then we'll have to see what happens with the change in the administration. Where we are transactionally. We'll certainly have on the books very favorable rules, as we've already talked about. And I think it's -- you just never know what the change in administration, but it would be very intellectually dishonest to hold the industry back from continuing to transact.

Great. And at what level of leverage would you be comfortable in any M&A or combination scenario? What would you like to achieve from a balance sheet perspective ideally?

Look, ideally, we would get back to high 3s, low 4s and a large-scale transaction like the Scripps transaction we pursued late last year would have gotten us there in one fell swoop, but there's multiple ways for us to get there through market-by-market transactions, further spectrum monetization, cash flow creation, which is going to be very big here in the fourth quarter with political. So that's our target. And certainly, M&A, I think, will be an accelerant to get there.

Great. And no discussions of any kind to report at this point.

On the M&A front, we -- again, we have a very robust pipeline on the market-by-market front. So I'd expect to see some news coming out there.

Okay, great. And then turning to political, obviously, a bright spot for broadcasters this midterm election season. You recently raised your guide to at least $375,000 (sic) [ $375 million ]. Are there any trends or updates that you can share today?

Yes. So I think let's start with the size of the pie because the cycle is historic. If you look at AdImpact, they're projecting '25, '26 political cycle to be $11.6 billion in total political spending, which to put it in perspective, is higher than the '23, '24 presidential cycle, which was at $11.2 billion and 30% higher than the comparable midterm. So the pie itself is quite bigger. And I think critical for us, broadcast is a significant piece of that pie, roughly $5.6 billion. So that gives us a lot of confidence.

I think number two, if you look at how we are positioned and if you look at the top 10 markets, which are expected to be large political spenders. We are very well positioned in those markets with 6 competitive Senate races in those markets, 7 competitive governor races in those markets and over 30 competitive house races. So we feel very good about our positioning in those markets. And also keep in mind that there is a local news component to it, which brings in a lot of trust halo, if you will. And I think that's important to reach those undecided voters. So I think that's very important to keep in mind. If you look at our second quarter political revenue compared to comparable cycle in 2022, it was up 9%. So I think the trajectory kind of points to our updated guide of at least $375 million for the cycle. So I think we feel good about where we sit today.

Great. And can you share what portion of that is already booked or the remaining opportunities booked?

Yes. So I think what I would say to that is as you get into these last 8 weeks, I think it becomes more of a question of managing the yield and the pricing because the demand is visible. It's there. And I think what swings some of these numbers is a few things. I think one is how competitive these races are, right? If you have races that tighten, obviously, more dollars kind of flow in. And if there are races that are breaking open, then you'll see some spending kind of pulled back and maybe redeployed in other markets.

And if you look at fundraising, which is a big driver of this, it has been at historical levels. And that spending has occurred earlier in the cycle. So I would say all of these things kind of point to a record cycle and like I said before, we feel good about where we sit on the at least $375 million guide for our political revenue.

Great. Thank you. And as you think about future cycles, what impact, if any, do you expect from recent legislative rulings around coordinated spending and the lowest unit rate eligibility on political advertising trends. I think there's especially in a focus on '28 versus...

Yes. Yes. It's a very interesting question, and I think there's a lot of movement over the past 10 days, I would say, 2 weeks on this. So let's just maybe level set there first. So the Fourth Circuit, they set aside the Media Bureau's guidance in late August. And then Supreme Court kind of stayed the Fourth Circuit subsequent to that in early September. So what all of that means is that party coordinated spending is back on to be eligible for lowest unit charge.

Okay. So what that means is there's more spending that can take advantage of the preferential rate. So that's going to increase the demand for political spending, although it would put some pressure on pricing. So I think here, the question is going to become more of managing yield and the pricing more than anything else. And we don't believe it's going to have a very significant impact, positive or negative, one way or another in this cycle. And part of the reason is if you look at history and if you look at political party spending on these cycles, that has been mid-single digits for us.

So if you keep that in mind, one way or another, it will have some impact, but we don't expect that impact to be very, very material. And I think the last thing I would say to you is that -- and I think a lot of discerning listeners know this, lowest unit charge is not a single number. Lowest unit charge gets updated. It's across multiple time periods. There are rate cards around it. So there's a lot of science that kind of goes behind it and those can be kept up to date. That's what I mean by yield management as we kind of go through the cycle.

So you have flexibility to basically moderate price versus volume?

Yes, within the predefined rules, we can't just go in and change it simply because there's a higher demand. We will just have to manage it as we kind of go along.

Okay. Great. And I think outside of the LUR, a longer-term question around political is how broadcast will continue to compete and maintain its share of political revenue just given all the other outlets of media and sort of ways that you could actually advertise. So how does broadcast kind of maintain its 50% share roughly of overall political advertising revenue in your view?

Yes. No, I think -- look, broadcast is the largest in these media, although Connected TV is taking share, which is focused on targeting. But when you look at political, there is a structural reason for broadcast because no one matches the broadcast reach. And if you look at how some of these races and elections are decided, you want to reach the undecided voters versus targeting those who are already persuaded. And if you look at Sinclair's footprint, and you look at who watches -- we have 1/3 of our viewers, which are Republican, 1/3 of our viewers, which are Democratic and a third, which are Independent. And so it's a very, very good cross-section and broadcast kind of provides you that to reach those undecided waters, which can sway the election one way or another.

And I touched on, I think, a very important point that there is a local news adjacency to it. These are the people who trust local news. So there's a trust factor there that comes in that only broadcast can deliver, CTV doesn't do that.

I think I would add to that, Marlane, that if you look through history, there's always been something new that comes along. Last cycle was Connected TV, which took out $2 billion out of the $12 billion and before that was social media. And every cycle, although that new area takes some share, the dollars allocated to broadcast kept going up. It wasn't true in other mediums necessarily. And so -- and that goes to what Narinder was talking about. We have the viewers that decide elections. So those are the people you want to target, those are people who want to reach. And that's why dollars to broadcast continue to go up cycle over cycle.

Great. And turning to core. Is there any update you can give us since you reported anything notable in particular categories of advertising that's maybe changed or is notable.

Yes. I think we have been very consistent in how we have messaged how core is trending or how we expected it to trend even if you go back to late last year when we issued the preliminary guide for 2026, we cautioned on macro. We were seeing some signs there. And as we kind of progress through the year, we continue to see those macro pressures materialize in the numbers. Although we held our guide in our first quarter results, we thought it was prudent to revisit that in the second quarter when we reset that guide, right? And it's not a broad-based impact. I mean, there's certainly a political crowd out that's impacting core, and that is to be expected.

But the political cycle is very, very strong this time around as we just went through it. And if you look at just the core key categories, the impact is not broad-based. It's just concentrated in a very handful of, I would say, cost pressured categories which are very consumer-facing, which impact consumer confidence and consumer balance sheets. Those are the categories which we saw were lagging in the second quarter and we have kind of continued to see that continue on into third quarter as well. So there is not a huge significant change from what we observed in the second quarter into the third. The trends have just persisted. So I think it was very prudent for us to go back and reset that.

Great. And Nielsen revised their local TV methodology. So as they implement that into local TV currency, do you expect any impact on audience measurement and advertising demand?

Yes. So on Nielsen, I think they have made -- this would be the third measurement upgrade in 2 years from Nielsen. They moved to big data and panel last September, as everyone knows, then they expanded out-of-home measurement and then most recently, co-viewing measurement, which I think these are all positive and actually really truly capturing the audiences who are viewing all of these different mediums. And I guess on magnitude, what I would say is the Nielsen's co-viewing pilot, which went into effect earlier this year showed roughly a 4% lift for marquee events in broadcast, which I think is hugely positive.

But I guess they still have some work to do to satisfy all the different parties. And I will always say that it's still undercounting or not measuring those. But I think what it matters for us is that advertising is clearly priced off measured audience, right? And all of this doesn't change overnight, but I think the trajectory is in the right direction. We've always felt that broadcast was undercounted. There are a lot more audiences that go to broadcast for appointment viewing your marquee sports events. So I think all of that is very, very positive. I think it's very early for us to size the impact of that, how it translates into revenue for us. But I think it's all moving in the right direction.

Great. On the retransmission side, 2 major network renewals remaining this year, I think roughly 2/3 of subs renewing next year. What do you think are the biggest drivers of future retrans growth? Is it pricing, churn, something else?

There's really 3 big trends happening as it relates to our net retrans and thankfully, they are all moving in a positive direction for the company. Number one is we are seeing churn improve and we've seen that through several quarters now, driven by new strategies rolled out by Charter and others who are bundling in more streaming packages into their base pay TV offerings to consumers, and they are very significantly changing the value proposition from a consumer perspective. I'd love to point out that if you take a look at the Charter offering, and you subtract the cost of all the bundled-in streaming services, the cost of what legacy pay TV would be, which would be the broadcast channels, ESPN and then some cable channels is less than $30 a month on a net basis.

You compare that to the prior offering where they didn't bundle in all these streaming platforms that was $100 so you've significantly changed the value proposition to staying with a pay TV provider like Charter, and that's why I think you're seeing other MVPDs follow suit with a similar strategy and that's why you're seeing the consumer react and saying, "Wait a second here." This is a significantly different value. And beyond the value, they are also making it easy to have all your video in one place. You can't underestimate the incentives and the -- sort of the power of simplicity and having all your video in one place.

And you're starting to see that in the numbers translate through. And you're seeing this bottoming happening in the pay TV ecosystem, which has been long predicted that would happen, and now you're actually seeing in the numbers. So that's the first trend. The second is from a broadcast perspective, we are and continue to be the most important channels in pay TV. We have the best content, be it sports or news or even our entertainment content. And we are one of only a handful of the must-haves on pay TV. So when we are up for renewal with our MVPDs, we still deliver much more audience than the percentage that we take in terms of the pay TV payment pool and that enables us to get favorable renewals, and we're expecting that to happen next year as we come up with 2/3 of our subs.

And then on the network side, all the networks now provide all their content on streaming platforms, the last of which was FOX launched last year, FOX One. Those streaming platforms now generate significant amounts of revenue and they benefited from this implicit subsidy from broadcast, where our content moved over there, helped build those businesses up and those businesses really didn't pay for the content. And there's a rebalancing that's happening with the networks where the burden of the content cost needs to shift more towards stream. So those are the 3 big trends that are moving our net retrans in a positive direction going forward.

So you do think you'll continue to grow price or that price will continue to increase?

I do think so, yes.

And then you touched on this, Chris, as we do think about sports rights in particular and that rising cost, just thinking about it from the network side, flow through the MVPD side and how that ultimately affects you and how you pass that along for lack of a better term?

Well, it doesn't look like we're going to have to answer that question as it relates to the NFL. So the only experience that we can point to in recent history was the NBA deal with NBC, where a significant amount of fees were agreed to by NBC to bring the NBA back to broadcast. It's been a phenomenal success for the NBA and for NBC in terms of viewership and reach. And I think both sides are very happy with the outcome. But it was a big step-up in terms of what was paid to the NBA. And we lapped a renewal with NBC where our expectations were set at the beginning of the year, the renewals at the end of the year. And in between, setting our expectations and renewing with the NBC, they signed the NBA deal.

And you would think -- or sort of the natural question is the question that you're asking right now? Are they going to pass that cost through to us or an affiliate who would benefit from that content. Well, all I can tell you is that we exceeded our original expectations that were set before the existence of the NBA deal ever was known. And so in our recent history, I would point to our ability to push back on this pass-through concept of the cost. And it goes back to what I mentioned earlier, which is that same content is also on Peacock that NBA content. So the reality is where that cost got allocated was to Peacock, not to broadcast. And it is going to be the same discussion to the extent that there's more having to be paid for NFL.

Great. Turning to spectrum. You recently highlighted that your portfolio is maybe worth up to $4.1 billion through auction, negotiated lease or sale. What are the practical steps or time line to actually extract value from your spectrum assets?

Just to put a finer point on the $4.1 billion number, which I mentioned on our last earnings call. When you take a look at the 2017 incentive auction, the average price per megahertz pop was $1. But if you take a look now at recent comps with -- in low band, it would point you to $2.50. And so the $2.50 is just applying that to our total megahertz pop within all the stations that we own. And in a world where we've sunset 1.0, which is in an NPRM in front of the FCC right now, which were -- the whole industry is pushing to have that happen. You only need 25-ish percent of your total spectrum to do what the core business is today, which leaves 75% to do other uses, you could obviously put out more content which some broadcasters may choose.

We and other large broadcasters have formed EdgeBeam to work on data casting applications to fill that excess spectrum with more revenue-generating opportunities, and that includes things like enhanced GPS, digital signage distribution, and it also includes Merkhet Solutions, which was spun out of NAB, which will be -- as a backup for GPS, which -- and they're working closely with DHS and DOT to get acceptance as the backup for GPS, which is sorely needed in the U.S. And there's other applications under development around automotive and autonomous vehicles. So that's another way to monetize our spectrum.

And then the third way is something that was sparked by a recent Wells Fargo Research report citing that sort of dynamic that I mentioned earlier that this -- the market value of the spectrum that we have is a lot higher than what the last auction would imply and could a certain amount of our spectrum be repurposed for wireless users like T-Mobile, Verizon, one of the new LEO players on the satellite side. And the short answer to that is, yes. There's certainly historical precedent to that. That's essentially what happened in the 2017 auction. There is no auction authority granted by Congress around another auction for our spectrum, but something could be done on a negotiated basis and I do think there would be interest from wireless players in that sort of arrangement. And in terms of what would have to happen to get there, you would need FCC approval. You would need some amount of clearing of certain bands of broadcast stations and then you would have to have a counterparty obviously.

And I don't think the industry is interested in doing another auction. And you'd have to go to Congress to get that approval. It's a bunch of uncertainty last time around, big bidders like Verizon and AT&T didn't show up, and that's one of the reasons why the outcome was not as -- was not what people had expected it to be. And I think there is an opportunity going forward to do something like that, but there are things that -- there are steps that need to happen in order to unlock that.

Probably hard to answer, but I mean, what could be a reasonable time line where we could see some form of cash flow generated from your spectrum assets.

There already is revenue being generated by EdgeBeam but it's early days. Those are new applications and new markets that are going to have to go through a development curve. A key component to really unlocking that is sunsetting 1.0, the NPRM that's currently in front of the FCC calls for a sunset, February 15, 2028. We're hoping to get the FCC to act on that NPRM post midterms. That date probably moves around based on what the final NPRM looks like. But that is really the key unlock for a lot more revenue, be it through data casting or be it through what was talked about earlier in terms of leasing to other players for their use.

Great. Turning to ventures how quickly could venture assets be monetized? And second, do you still prefer a venture spin to occur alongside a broader -- a larger broadcast transaction?

We've been actively monetizing ventures assets over the last several years. We're roughly $500 million of cash now and $500 million of minority investments. We continue to chip away at those minority investments and monetize those when opportunities become available. Some of them we'll just have to wait for them to naturally go through their life cycle. Digital Remedy is not something we're looking to monetize anytime soon. It's growing very nicely from an organic perspective. We're looking to actually add inorganic acquisitions like we did last year that have been very accretive. So we're looking to scale that company up.

And then Tennis Channel, again, not looking to monetize that either -- that's going through a whole streaming transition, much like what ESPN is doing right now. There's -- it's got a great new leader in Jeff Blackburn. He's revamping the entire digital platform to be relaunched in Q4 of this year. So we're expecting really great things out of those new apps. He's got a great rights portfolio, a lot of excitement around Tennis in terms of participation and viewership and getting that -- the streaming subs up on that business up significantly, which we think Jeff can do that will dramatically change the valuation of Tennis Channel.

So no plans to necessarily do anything on those 2 big portfolio companies? And then on the minority investment side, we're always looking for opportunities to monetize those because we do think it's pretty hard to get credit for those from Wall Street. And then in terms of your question on spinning that work is still proceeding on that front. Our preference is to do a spin merge where we find a merger partner for broadcast. We've not been shy about talking about that publicly, and that is still our preference. And we're going to keep the optionality of ventures and its resources in play until we figure out what the right path is for the broadcast side.

Great. And you touched on this earlier, Chris, but what do you think is the appropriate long-term leverage target for the broadcast business?

Yes. So in terms of leverage target, what we have said is it should be kind of for us in the high 3s to low 4s over the medium term. And I would say, if you take a look at it over the much longer horizon, I think it has to be in the 3s and the mid-3s. We obviously have taken significant steps to delever the broadcast balance sheet, as you know, Marlane. Since the start of the year, we have retired or repaid $320 million of debt. And we also have just in early July, repurchased $25 million of term loan and we fully intend to use the free cash generated in this political cycle and in the '28 political cycle to continue to delever the balance sheet.

Plus, I think Chris mentioned in the M&A section, there are multiple other levers to delever the balance sheet from in-market optimizations, portfolio optimization, we have executed a significant amount of JSA buy-ins and then any large-scale M&A or any spectrum optionality will significantly delever that as well?

And Narinder, in 2Q of this year, $320 million of term loan and AR facility was paid down. So what is your preference on a go-forward basis in terms of the float versus fixed mix.

Yes. We -- obviously, fixed and floating mix is not a static number. As you know, it's a function of the rate environment. We are currently at 70% fixed and 30% variable. If you look -- if you take into account the interest rate hedges that we have on the book. So I think that mix kind of makes sense. In terms of deploying capital where we go, I think we will take a look at it, obviously, from a returns perspective and what minimizes the interest expense as well as well as we're going to place emphasis on nearer maturities. And I think if you think about it that way, I think you will see that the floating rate exposure kind of makes it to the top of the list, although there are opportunities in our second-lien notes as well.

And after several years of cost initiatives, is there a meaningful opportunity for further cost optimization?

Yes, that's a great question. I don't think about cost optimization as kind of a one-off exercise. I think we continue to look at the business we are in the long-term trend lines in the business that we have discussed. And we ask ourselves the question, if we started from 0, what should the cost structure look like? How would we go to market with the top line that we have. And I think that drives a different set of conversations than just trying to optimize one department or another. And I think Sinclair and perhaps others have done a fabulous job centralizing a lot of those functions over the years. I think the opportunity now is to see how can we make these workflows, which were centralized in their silos kind of talk to each other.

How do we make these workflows end-to-end and across those silo boundaries? And we are obviously working on that. And as Chris likes to say, when we think about cloud, that we have paid our tuition there, we have moved a significant amount of operations to the cloud, which obviously increases the operating expenditures, but relieves your CapEx on an ongoing basis, right? So I think there's significant leverage to be gained there as we've kind of gone to media cloud play out, working on significant transformation of our news operations and content centers and deploying the cloud workflows. I think there's a significant opportunity there. I think everybody talks about automation. I think, yes, that is table stakes and then artificial intelligence. I think the way I think about this is just reinventing and reimagining and rewiring our core businesses, right?

How can we deploy this technology to move at speed, be better at what we do and deploy our resources in the most efficient manner. And I think we started that several years ago. We are in the thick of it. We just don't talk about it in a very visible fashion, but rest assured, the team is very, very focused on executing on those initiatives.

I just want to underscore something that Narinder alluded to there, which is that we -- it took us over 3 years and tens of millions of dollars to transition to the cloud. No other broadcaster peer has done so. And once you get there, which we're just getting there, we're going to finish by the end of the year, all of our stations, it then unlocks significant amount of transformation ability for automation for AI, not only just in terms of streamlining workflows, but also getting your content into new end points and using things like AI to version it for different platforms, for instance. So I do think -- on a relative basis, you're going to see more out of us in the years to come because we paid that tuition and we spent those years and the extra money to do it, and our peers haven't done that.

Great. With one minute left, what do you think the market currently underappreciates about Sinclair?

A lot of things. Much more than a minute worth. So -- look, from an equity perspective, we're clearly mispriced. We talk about this a lot. We're either -- we don't think we're getting much, if any, credit for a minority interest portfolio on the venture side. The true value of Digital Remedy and Tennis Channel also being sort of lost in the fact that we have this holding company corporate, which ends up canceling out a lot of the EBITDA there, which is I think, a totally different valuation profile than the broadcast side. And then on the broadcast side, we really have gone through several years of heavy investment like we mentioned in the cloud, but there's been other initiatives rolling through, which we think are going to have big impacts on the business going forward.

And the positive trends that I mentioned earlier around the core business on retrans, we didn't spend a lot of time talking about the advertising side, but we've done significant work on digital and audio and podcasting, which is starting to bend the curve upwards on core ad growth. So there's a lot of positive trends that have taken a while to succeed but they're going to start playing out over the years to come in the core business. And if you buy us now, you're basically getting ventures for free.

Great. Well, Chris, Narinder, thank you for the time.

Thank you, Marlane.

Thank you.

Pleased to have Sinclair broadcasting with us today. Both, Chris Ripley, CEO; and Narinder Sahai, CFO. Thank you so much for coming.

Thank you. Great to be here.

All right. Yes. So maybe can I start with a high-level question? So at the industry level, forget about Sinclair for a second, I would love to just start with the health of the broadcast industry as we sit here today. How would you characterize it?

The industry trends that really drive our business are quite healthy. So I would highlight 3 in particular around net retrans. Number one is we are seeing a moderation of churn, and this is being driven by new strategies deployed by MVPDs like Charter, who are bundling in their streaming packages into their core cable offering. We think that's been really effective. We term that the great rebundling. So you're seeing this sort of bottoming out on pay TV penetration, if you will, that's been predicted for quite some time, but we're actually now we're finally seeing that in the numbers. So that's really important.

The second trend I would highlight is, the continued pricing power within broadcasting. So the broadcast industry as a whole still far -- takes far less out of the pay TV pie, dollar pie than the viewership that it puts in. So...

You mean, ad dollars?

No, I'm talking about distribution dollars, retrans, right? So I think we account for about 45% of the viewership within pay TV, and we're around 30% of the pay TV dollars that get distributed out. So that -- and then furthermore, as we continue to try to close that gap and get to parity, there's a good argument that we deserve more than our viewing share because the premium nature of the content that we deliver like NFL Sports, College Football, Playoff Basketball, Playoff Hockey and News. So it really is the most premium, the most must-have content on Pay TV is broadcast and increasingly so as the average cable channel has really gotten gutted by streaming.

And then the third trend is...

Can I pause you for a second?

Sure.

That 30% of dollars versus 45% of viewership, I thought maybe I misheard you, you said net retrans in there.

No, I was just talking about gross.

Okay, gross. Okay. Sorry. Okay.

Okay. Yes. So obviously, the churn side and then what we get paid by the MVPDs feeds into gross. So both are very positive trends for gross. And then when you look at what we net down and what we pay the networks, there is also a rebalancing going on where the networks have all launched significant streaming services. They're, by and large, years into that. All of our content is available on those streaming services, but yet those streaming services do not pay their fair share for the content that they are benefiting from. And so there's a shift in terms of the cost, the content burden between what the networks allocate to the streaming service and what they demand out of the broadcast channel.

So that is also a positive aspect in terms of what the net cost of our content is. And those 3 trends, I think, bode really well for the years to come in terms of our main profit driver, which is net retrans. Then you look at the advertising side.

Can I pause you there for a second, just on the that third one. I'm sorry, for keep interrupting. Is another way of saying that third one that because the content is not exclusive on your stations that the payment that you make to be an affiliate should be less. Is that another way...

That is another way to look at it. And the other way, there's the exclusivity component, which we used to have exclusivity, we do not anymore. And then when you think about the same content is going into 2 different end points, okay? Both endpoints are being monetized and the burden of the cost of that content should be shared fairly between the two.

Understood.

Then on the advertising side, we're having a banner year on the political ad front. We just raised our guidance recently up to $375 million plus. I expect that we will break new records for midterm advertising. We broke new records for the Presidential cycle in 2024. And I think we'll establish a new record in 2028 with dual open primaries. So the [indiscernible] be a very strong point.

On the core advertising side, we continue to manage through spot declines, but we continue to also grow our digital side of the business and our audio side of the business. And as that becomes a bigger percentage of our total advertising pie, we're able to bend the curve up in terms of core growth.

And when you say spot declines, you're just talking about?

Regular linear.

No, understood. But that's not a function of you reducing ad load that's just a function of the viewership like the engagement coming down, which means there's less spot impressions to sell. Is that what you spot decline...

Correct, correct, correct. So we're able to make up for that and then some as the rest of our business becomes a bigger percentage of the whole.

Perfect.

And then on the cost side, we specifically have made significant progress rewiring our business, putting it on the cloud, transforming our content centers automation, and AI, of course. And this is going to have significant impact on the years ahead in terms of reducing the cost of delivering the content to our consumer.

Perfect. It all sounds healthy. So I want to -- can I dig into one of those? Because I admittedly get a little bit confused about the pay TV trends, which you said were sort of -- the rate of cord cutting is moderating. There's part of me that I've seen some data and in fairness, I haven't seen it every year, but it implies that the majority of the cord cutting that's happened has occurred among the households that don't care about sports, and we're almost done with those. And so whoever is left, most of them care about sports. And the bull case would be that's why you're going to see a moderation in cord cutting because where else are you going to get all your sports. That makes me sort of pretty bullish, right, in terms of the cord-cutting trends.

On the other hand, I put on the other -- one side is the angel, the other side is the devil, I look at ESPN Unlimited and FOX One and I say, oh my gosh, this is the first time that you get all the major leagues digitally, right? You don't need to have a pay TV subscription, which is a new phenomena, and that makes me nervous. And so do you have -- I guess, your preference would be the former that we're not going to see consumers sign up for 6 different apps to get all their sports. They're just going to enjoy the simplicity of having one subscription, a pay TV subscription.

Well, you've half answered the question.

Okay. Great...

Because it's not just about simplicity. Although that certainly is a big driver, but it's also about value and pricing. So if you're a consumer, and you're interested in sports, there is no cheaper way for you to access all those sports than having a pay TV subscription.

If you were to try to piece together those 6 apps or whatever the number is, in order to get all of the NFL or College Football, what have you, you would quickly find out that your total cost to do that would massively exceed what the cost of just the average pay TV bundle is. So the value proposition is really there. And when you think about what Charter has done and others are following is that they've gone even one further, they said, okay, you're going to have this pay TV bundle, which has pretty much all the sports that you care about, and we'll give you all the most popular SVOD packages bundled in as well.

So the value proposition has dramatically changed over the last couple of years. When you break down Charter's offering, just the cost of the traditional pay TV component of it, which you would be like your entertainment, cable channels, ESPN and the broadcast stations amounts to about $30 a month after you net out all the cost of all those streaming packages that they bundle in. So you went from a couple of years prior, that being around $100 to now being worth $30. So the value proposition fundamentally changed for the consumer and also made it simpler, made it easy, one portal to access all the streaming content you want and your traditional pay TV bundle, which is anchored by sports.

Understood. So can I ask...

Then there's, I think, a couple of other points to that. I think one is, obviously, Chris mentioned value and price, but there's also fatigue, right? If you put the customer at the center of it, there is -- they have to research what platform the game is on, and that's real friction. So keep that in mind. And I think the bigger point here is also on league economics. But at the end of the day, audience reach is very important. And there's nothing that rivals broadcast still in that reach. So I think that's very, very important to keep in mind. So I think streaming is probably additive reach, not a bundle killer.

That's great. Can I add one more that gets me excited, but I don't hear as much conversation about it among investors. I don't hear as much conversation about it even among some of my peers is the launch of this YouTube TV package that only has sports. This seems like a very big innovation to me. In that it sort of gets to the terminal year where people don't care about MTV or VH1 or Noggin, right? They just want the sports. And for the first time, I think, you now have the simplicity of admittedly a digital MVPD sort of giving the consumer what they want. And yet I haven't seen as much talk about this. I haven't seen other MVPDs sort of follow-up...

Well, no, there has been some others, DIRECTV has done a package like that. I think Comcast has done a package like that. So there was a lot of buzz around that when they put it out. It was fine for us because we were included in it, right? So all good. But when you -- again, I think it comes down to consumer simplicity and value proposition. And the price point of those packages was not that different from the full package. So...

Well, I think YouTube TV is charging $65 a month, $65.99 for their sports-only pack.

Right. And then all-in packages is $80. So...

Okay. Okay.

How many people were not going to pay the extra $15 just to get the full package?

I see.

And so if there was a bigger gap there, I think you would have seen more uptake on the sports only, but for $15 more, you'll have the full package. You know that...

Okay. And you get all the streaming...

And then you get all the other -- Yes. And by the way, the value prop is even better if you stick with a company like Charter because YouTube isn't bundling in all those streaming services as well. But either way, like what's important from us is that they stay within the pay TV ecosystem, whether it be pay TV, pay TV sports only -- or sorry, YouTube, YouTube Sports package or DIRECTV or Charter. And what we're seeing in the industry right now is that bottoming out that I described earlier in terms of where pay TV penetration is headed.

Understood. Makes sense. So can I shift to consolidation? I've been on the phone with some clients, and they just come up and they say, oh, there's no more pay TV -- or there's no more consolidation among the broadcasters. And I said, what are you talking about? Like the FCC sort of lifted the cap, like -- it feels like everyone should -- like, I'm just telling you there's no more consolidation. I'm like, wait a minute, this battle that's happening between Nexstar and TEGNA is a subset of these markets where they own 2 or more of the big 4. Like why would that just sort of stop in its tracks pay TV consolidation. So I'm just confused about that point. I don't know if you agree with this, that we sort of -- all broadcaster consolidation is on ICE or if this client misspoke.

Well, look, it certainly has chilled the market, no doubt about it. But it has not stopped consolidation. We have continued to pursue big opportunities and double down on market-by-market optimization. So we announced earlier in the year doubling up in Tulsa, and we've got several market-specific or maybe a handful of market transactions in the pipeline.

And then as far as large-scale M&A goes, we've learned a lot watching that transaction. And sometimes it doesn't pay to be first through the pipeline. And we think there's a lot you can do to mitigate what is going on with the state AGs and really, it's all paid for and motivated by DIRECTV. And so we think that can be mitigated. We think the rule changes that have gone into effect with the FCC are also helpful.

The ownership cap.

Yes, ownership cap specifically, and there's also in the works, some further local ownership deregulation. So we're looking forward to that. And the DOJ has never been more open for business than it is now. There was a fundamental shift in the way they viewed the market with the approval of the Nexstar, TEGNA transaction. So that can't be underscored enough. And so we -- no doubt that there is a new attack vector on transactions in general through these state federal courts. And you're not just seeing it in Nexstar, TEGNA, but you're also seeing it in PSKY, Warner Bros. deal, and Ticketmaster, I think, too. So it's an obstacle that can be overcome. And no doubt it's had an impact, but it's not insurmountable.

I tell my wife all the time the danger of doing this on the sell side for so long is you do it for so long and you think you know something and then something changes. And the state AG example would be an example of something that's just radically changed the landscape, which I was sort of not anticipating. You talked about other FCC changes that may be in the works. Can you divulge those? Or is that sort of too behind the curtain sort of TBD?

Well, there is the quadrennial review, it's undergoing right now. And it's a 2022 quadrennial review, but it doesn't really matter. It's 2026 now. But we're expecting that there'll be further loosening of some of the rules. There's not a lot of rules left, but there are rules that govern radio, and there's also some rules left on the books for TV broadcast. So I won't get into specifics, but we expect that, that quadrennial review will yield some further loosening.

Okay. That's great. So are there -- so in the sort of traditional cable pay TV landscape, I used to have these like rules of thumb, which weren't perfect. But you could say, oh, if pay TV company that had 6 million subs, was merging with someone that had 10 million subs, there were enough transactions where you could begin to develop heuristics, right, to say, okay, this is how much they're going to save on their rate card and their affiliate fees and it worked pretty well. Are there similar sort of -- do you think there are rules of thumb or things that people can use, not perfect, but as a shorthand for thinking about cost saves as it relates to broadcast consolidation? Or is it too idiosyncratic...

There is more -- in terms of synergies more broadly, it is very deal and company-specific because one of the bigger synergy lines tends to be distribution revenue or retrans revenue. And so that you can't necessarily tell from the outside, who has higher rates, how much higher they might be. So that's pretty idiosyncratic. What you can tell, though, fairly easily is that if two broadcasters come together, probably the vast majority of the corporate overhead can go away. If you're combining two markets, two overlap markets, we use the rule of thumb that about 2/3 of the non-programming expense of the smaller station can be eliminated.

I don't know if you probably don't have access to that level of information, when you're analyzing a deal, but that's a rule of thumb that we use. So those are two big areas, overlap markets, corporate overhead that are going to be in just about any merger. I think where it gets harder for you to predict on a rule of thumb basis would be distribution.

And what do you think made that easier in the pay TV space? Was it just there were rate cards that everyone had a certain scale and it was sort of a known knowns, and so you just jump on a new rate card and scale and/or...

Well, I don't know, the rate cards -- well, again, I'm not sure, to be honest with you, there might have been more commonality in certain things that you could assume...

Maybe I was just lucky with my rules of thumb.

I guess, maybe.

What about headwinds? Are there any headwinds that people should think about, like dissynergies? Or are those nonexisting?

Dissynergies from combinations, if they are, they're really small.

Okay. Okay. Very good. So can we talk about Ventures, the Ventures spin? Okay. So do you think it's possible the Ventures spin can occur without it being part of a station acquisition like a...

It certainly is possible. We've been on record saying that our preference is to do a spin merge.

Spin merge. Okay.

Yes. And that's what we've been pursuing pretty much from the start of the review. We would have effectuated it if we had succeeded in merging with Scripps. That was part of the strategy there. It's still something that we think is the best answer. And we're still doing the work needed to get carve-out audits and be ready to spin Ventures. But until we see what the final picture looks like on the M&A front. We're going to reserve that spin until we have concluded one way or the other where broadcast is headed.

Okay. Is that driven by tax? Is that driven by...

No. Really, look, tax, obviously, a spin is tax-free, but we have the flexibility for it to be taxable, on the corporate side. We just want it to be tax-free on the shareholder side. And really, it's driven by a few different factors. Number one, we firmly believe that given where the rules are going, that the market is headed towards two big super groups. And we want to be a part of that. And to the extent that we need some of the resources at Ventures to effectuate that combination, we -- keeping it together will make that easier until we have determined what options are available to us.

And then also, when you do spin something up or spin something apart, you do have to set up separate overhead for that new company. And so that is an extra burden cost in the setup that you want to be prepared to accept and you want to make sure there's enough of a reward on the other side, if you're going to go down that road.

Okay. So I heard what you said in your opening remarks around the health of the political ad market. And you talked about being able to offset some of the spot reduction you said with some of the digital growth. But one of the things that I think stood out, and maybe I'm wrong, is that of all of the ad mediums that are sort of out there, outdoor or print or digital or CTV, it felt like local TV ex-political was one of the only pockets of sort of soft weakness, and there's a little bit of a debate, I think, on the buy side about is this just political crowd out that we're talking about? Is it something a little bit deeper than that? What's your thought on that? Is it just political crowd out? Does it go a little bit deeper and I know it's deeper? What is it?

Yes. Good question. And it's not just the political crowd out. So if you take yourself back to perhaps the May call, we did outline that we are seeing some macro uncertainty. The visibility on the advertiser side was restricted. And we saw some of that materialize in second quarter. So it's a genuine caution in a handful of cost pressure categories, just driven by some macro uncertainty, tariff and fuel. And you're seeing some of that play out today. The overall market is significantly down because of all of that. So yes, political cloud out does play a part in this, but that's not just a political crowd out, just to be clear on that.

And just as a reminder, I think our core advertising was $308 million in the second quarter. And our full year guide is $1.22 billion to $1.28 billion, which is down $40 million at the midpoint, which incidentally was the same number we took up on the political guide. So it's natural to ask that question. So it's a good question to ask. It was not all political crowd out.

Okay. Super helpful. So you guys have really leaned into digital advertising, including podcast, by the way. How happy are you with these initiatives? And how has it progressed relative to what your initial thoughts were?

Yes. We are very, very, very pleased with the progress we have made there. For our advertisers, they're looking for audience engagement, right? And it's not just linear platform. It's how we package in a cross-platform deal, combining linear with connected television, with our digital properties, with our audio and podcast and with live activations. And we actually saw a real live example of that in the FIFA Soccer World Cup, where we actually were successful in combining all of these elements and provided our customers with a way to engage with the audiences in a meaningful manner.

So that was a very interesting proof point for us, and that capability exists. And I think that's where you see a lot of the clients going. They want to engage with the audiences in a very meaningful manner. So we are very, very happy with the progress we're making there, and we are going to continue to scale that organically.

Okay. That's great. You brought up World Cup, and I think FOX is a decent partner of yours in terms of network affiliations. Should investors be spooked about the World Cup comp as we move into next year? Or do you think that's sort of manageable given the underlying growth in digital...

It is manageable. It was meaningful, but I think you have to keep a few things in mind. One, it was an expanded format, but FOX retained a lot of the inventory. The affiliates did have some inventory, so that played in. And as I referenced, with our cross-platform capabilities, we are very pleased with the outcome. When you look at 2027, the comp is not just looking at World Cup or no World Cup, you're also comparing a non-political year to a political year.

I assume investors are used to.

Yes. There are puts and takes there. But I would say, yes, it was meaningful, but I would not characterize it as something that is insurmountable.

And we also have the Women's World Cup next year, too. So that will be helpful. We have a complementary podcast for that, too, that we're playing the same strategy on.

That's great. Who has the Women's World Cup rights? Which network do you know? I don't remember next year.

FOX...

FOX also. Okay. FOX. All right. Sorry to throw that curveball in there. So uses of capital. You guys have prioritized debt reduction as your primary use of capital. Why is that so important? And where ultimately do you want to get to in terms of leverage?

Yes. So great question. So deleveraging, we have said that on our last few calls and even prior to that, is a top capital allocation priority. And at least when we look at how we do that organically, right? 2026 is a political year. We are going to generate a lot of free cash flow. On the broadcast side of the business, we are earmarking a significant portion of that to delever the balance sheet, right? So that's a very high priority.

When you look at what we have done so far in 2026, we have actually retired or repaid $320 million of debt, which is quite significant. And beyond that, after second quarter, early in July, we also repurchased $25 million of our term loans. So you can expect us to continue to deploy free cash flow generated in our broadcast business to continue to delever the balance sheet. And as you know, our nearest material maturity is not until December of 2029. So we have significant runway, including the 2028 political year. And I would say there are benefits that come from delevering, right? So when you hit the refinancing window, the pricing is advantageous, given where your leverage is going to be. And then it gives you a lot of optionality, right? There's more headroom in your balance sheet to do different things.

And then there are other things that can further drive deleveraging, too. A large-scale M&A transaction can be quite deleveraging. Even the station swaps and in-market optimizations that we have done with our JSA partner buy-ins and the ones we continue to look at are also highly deleveraging, given where the post-synergy multiples end up being on these transactions. So they are quite deleveraging, too. So a lot of benefits obviously accrue from that. And we don't see really a change on the broadcast side from that strategy.

On the Ventures side, we are very focused on monetizing our minority investments and generating a lot of cash. There's about $500 million of cash on the balance sheet for Ventures. The mandate on Ventures is a little bit different. The mandate on Ventures is to find those businesses with very resilient cash flow streams that we can take majority positions in. And we're going to be very disciplined in how we deploy that capital on the Ventures side.

And as -- to round this out, as Chris mentioned earlier, that optionality is also available to us to facilitate a large-scale broadcast transaction. So all of these pieces on capital allocation are somehow linked and tied together. We think about this very holistically.

That's great. Anything you want to add, Chris?

One thing you didn't ask about that we're getting a lot of questions on is spectrum monetization.

Oh, spectrum.

And it plays into what Narinder just talked about in terms of deleveraging. It would be a very, I think, significant deleveraging event. And there's a lot of industry enthusiasm and energy around what I'm terming a third leg of the stool in terms of how we monetize our spectrum. First, being our core business, and in a world where we're not supporting the old standard, which is ATSC 1.0, we only need 20% to 25% of our spectrum to support what we do today in our core business. And we have an NPRM in front of the FCC now that would sunset 1.0 February 15, 2028. And we're hoping to get -- that date may move around when we get final approval from the FCC, and we're hoping to get the FCC to act upon that at some point after the midterms.

And the second leg of the Spectrum monetization stool is what EdgeBeam is working on, which is data casting applications like enhanced GPS, digital signage distribution, the Merkhet Solutions' BPS, which is a backup to GPS, which is an industry initiative, which we think will be adopted by DHS and DOT as a backup to GPS, which is sorely needed in the U.S. So these are all interesting and underdevelopment data casting opportunities, which we can use to monetize our excess spectrum.

And then the third leg of the stool is something that we're getting a lot of discussion on more recently, which is the notion that you could just take some of that spectrum and sell or lease it to a wireless player or a satellite player. And unlike the 2017 incentive auction, which was not well attended, which really only had two buyers, T-Mobile and DISH. The demand side of the equation looks much more robust. You've got probably likely demand from T-Mobile, Verizon, Starlink, AST, Amazon Leo and then a long list of other people who want to get into the Leo game. And if you're going to have a mobile system, you need more spectrum and some of the best spectrum is low band for that.

And the comps point to a value of the spectrum that we currently have at about $2.50 per megahertz pop. Contrast that to 2017 when the auction cleared at about $1. And if you've got a robust demand side of the equation, we think there's no reason to believe that it wouldn't at least hit the comps, if not more, which is a number I threw on the last call. If you play that math out at $2.50 a megahertz pop across our portfolio, it's over $4 billion of asset value.

But I think there's a lot of work being done around this now, looking at feasibility and a lease, I think, is also a very likely strategy as opposed to just an outright sale. And there's a number of ways the industry can organize around clearing a certain amount of Spectrum and leasing that out to a satellite or wireless player to create that third leg of the stool that I mentioned.

If the FCC acts on the sunset provision on Feb 15, 2028, maybe this is wrong, I sort of think of a TV as sort of having a 7-year life. And so these new ATSC 3.0 chips will go into these TVs, but then we have to wait for all of the old TVs to sort of cycle through. Does that mean investors should think of 2035 as being the bull case for when you monetize? Or is it possible to do something commercially before the last ATSC 1.0 TV goes in the trash heap?

No, absolutely. You should not be thinking about it that way. So the proposal in front of the FCC is that we turn off 1.0, February of 2028. Now that date probably moves around once it finally -- gets finally approved. But what -- and there's already been TVs in the marketplace for several years that are 3.0 ready.

Doesn't that just [indiscernible] or something?

No, no. A lot of manufacturers produce 3.0 TVs. But there -- undoubtedly, there'll always be a set of TVs in the marketplace that are still on 1.0, and you can buy a dongle for $40 to $50 today. And once this date gets finalized, we anticipate a surge of volume and demand for these dongles or set-top boxes, which you can buy and upgrade your 1.0 TV. So we will not wait for this...

Natural, just...

Natural. Yes, that's too long. People will have to upgrade their TVs.

Okay. That's great. Yes. This is fantastic. Thank you both for the time.

Great. Thank you.

Thank you.

Good day, everyone, and welcome to the Sinclair Second Quarter 2026 Earnings Conference Call. [Operator Instructions] 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 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 3. 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 caution in a handful of cost pressured advertiser categories. Narinder will take you through the details.

Live sports 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 Pickleballtv 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 4, 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 broadcaster's 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 across our 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. This 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 5. 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 spending. Importantly, these states include 6 competitive Senate, 7 competitive gubernatorial and 33 competitive House races according to a recent Standard & Poor's analysis. That combination of geographic reach, local audience scale and competitive races positions us well as campaign spending expands during 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 to 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-end loaded towards the weeks immediately preceding election day and timing can vary by race in 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 6. 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. AMP Media brands allowed advertisers to add targeted cross-platform reach, while our unfiltered soccer podcasts featuring Landon Donovan and Tim Howard gave brands another way to engage highly interested soccer fans around the tournament. In addition, 3 live activations around the World Cup let consumers physically experience 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 telecasts. Premium live sports remain one of the most powerful drivers of appointment viewing, and broadcast delivers that content with unmatched reach. As we ended the 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 7 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 us well as campaign activity builds through the remainder of the cycle.

Distribution also remained solid, supported by our partner station buy-ins. 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 broadcast with the targeting and measurement available through digital.

Our portfolio allows us to deliver both, creating more value for the advertisers while deepening engagement with audiences across platforms. Client demand is consolidating total video with linear and streaming bought together, and that is exactly what we have built towards. The World Cup was the template with 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 broadcasted-led live sports position 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.

Thank you, Rob, and good afternoon, everyone. Turning to Slide 8. I will walk through the second quarter financial results in more detail. At the total company level, revenue was $840 million, up 7% year-over-year. The increase was driven primarily by political advertising and continued distribution revenue growth. Adjusted EBITDA was $149 million, up 45%, reflecting a 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 advertiser budgets.

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 our 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, and 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 the 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 of $3.4 billion to $3.54 billion and Local Media revenue guidance of $3 billion to $3.12 billion. And within that, distribution revenue guidance is also unchanged at $1.72 billion to $1.79 billion for the total company and $1.51 billion to $1.57 billion for Local Media segment.

Finally, turning to key free 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 pretax 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 receivables 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 sales amount of our B7 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 receivables facility remains in December of 2029, providing us with a manageable runway to continue executing our deleveraging plan.

Sinclair Television Group, or STG, net leverage ended the quarter at 5.2x. 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. 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 audiences and strong advertiser demand across our platforms. Tennis Channel also maintained strong momentum across linear, direct-to-consumer, Tennis Channel 2 and Pickleballtv.

Our cross-platform portfolio is expanding our reach beyond linear television, helping advertisers connect with audiences when and where they interact with our brands. 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 reductions.

With that, operator, we are ready to open the line for questions.

[Operator Instructions] Your first question is coming from Dan Kurnos from StoneX.

Chris, you get the first crack at the upcoming FCC cap repeal. And any comments you want to make? It seems likely tomorrow, so little premature, but we've obviously been talking M&A in this 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 million 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.

Okay. I'll let Rob speak to what we're seeing on the political ad front. But in terms of the cap elimination, which is expected tomorrow, I mean, we couldn't be happier, and we certainly applaud the FCC for taking this very meaningful step to remove an outdated regulation that really just has no place in this modern media marketplace.

And it is very significant to change this rule. As we look at large-scale M&A, which is a major objective for us, this really derisks those opportunities, 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 the $375 million. And as we get closer into election day, we'll have a better indication of what races will remain hot and where that fund is going.

In '24, we saw some funding in Pennsylvania move to the bigger cities, Philly and Pittsburgh, where early on in the prerace, it was spread out throughout the state. So today, we're comfortable at that $375 million guidance, and we'll have more clarity within the next 4 weeks. But we feel very comfortable that we can handle this demand.

Yes. And Dan, I'll just add to that. Like the intensity of the political ad spend just -- it almost doubles every quarter. And then the fourth quarter, you only have half a quarter essentially of political ad spending, and it's usually about double Q3 in terms of volume. So it really is hard to predict how you will ultimately end up with everything being as back-end loaded as it is. But with what we're seeing so far, we were comfortable meaningfully increasing our guidance.

Congrats on print.

Thank you.

Thank you.

Your next question is coming from Benjamin Soff from Deutsche Bank.

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-in M&A, you recently closed your buy-in transactions, and I'm wondering how you think about the opportunity set for more tuck-in M&A. Are there any types of assets or markets that are attractive right now? And how do you think about balancing doing smaller deals versus your focus on larger consolidation?

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, we see the environment and of course, 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 key rule change that we're tracking closely here and it 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're 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 the large-scale front.

Your next question is coming from Steven Cahall from Wells Fargo.

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 could be 13% over 2024 or if there's something more special in 2026 that's driving that upside?

Sure. So look, I think the -- our platform is pretty much the same as it was 4 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 expecting this year versus 4 years prior is being driven by money raised. So if you pay attention to external research tracking these numbers, there is a significant step-up in money raised this year versus 2022, and it's approaching -- the total money raised is -- may equal 2024, which is a presidential year. of course.

So 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 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.

Yes. I will add, by the time 2028 comes around, some of our investments will be content on the digital side as well, a 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 will 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 costs than you thought for the year or a combination of those 2 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 EBITDA, it's plus $25 million. 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, right? 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 3 together, that does not take you all the way to $25 million. So the delta there is the outperformance and the expense management that we have achieved 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 3 telcos that might have competed to buy that from you at some point. Now there's another player in this market with more than $1 trillion market cap. Some days, it's $2 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?

Thank you for that question. It's a great question, Steve. We're -- it's very encouraging to hear from you and other market participants talking about the value -- 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 2 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 megahertz-pop, which we think vastly undervalues low-band spectrum given its scarcity value and its beachfront location. And really, that was just driven by a lack of competition.

And 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 showing up or a new entrant like DISH. 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 will be organized on a -- 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 at market, at auction, at a negotiated sale over $2.50 a megahertz-pop. I think 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. And -- 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 was 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 at least 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.

Your next question is coming from Aaron Watts from Deutsche Bank.

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 a rule. 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.

I do -- we fully expect people to challenge this order, and we think the FCC has -- is on solid legal ground here in terms of 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. 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?

Yes. I'll start with automotive, and 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.

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.

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

Good morning, everyone, and welcome to the Sinclair Annual Meeting 2026. [Operator Instructions]. Please note, this conference is being recorded. I will now turn the call over to your host, Chris Ripley, President and CEO at Sinclair Broadcasting. Chris, the floor is yours.

Good morning. I'm Chris Ripley, President and Chief Executive Officer of Sinclair Inc. As directed by the company's Board of Directors, I will be the acting Chairman of this Annual Stockholders' Meeting. It is my pleasure to welcome you, whether you are attending remotely or in person. It's 10:00 a.m. on June 4, 2026. And in accordance with the notice of the meeting, I call this Annual Meeting of Stockholders to order.

On April 23, 2026, the Board issued its notice of this annual meeting and proxy statement by which all stockholders of record as of the close of business on March 16, 2026, were notified at the date and time of this annual meeting. For those stockholders wanting to attend this annual meeting in person, the board advised that there may be location capacity limits, and therefore, admission to the annual meeting could not be promised.

Consistent with past practice, the Board encouraged all stockholders to vote their shares prior to the annual meeting. There are 2 primary reasons for that. Stockholders attending remotely are not able to vote or revoke a proxy through the teleconference or webcast nor participate actively in the meeting. Stockholders attending in person could arrive at the meeting, but not be admitted due to capacity limits or other reasons. Unless such stockholders are able to submit a completed proxy card prior to commencement of the meeting, their votes will not be cast.

For those stockholders attending in person and admitted to this annual meeting, when you registered this morning, each of you received a written copy of the rules of conduct for the annual meeting. Any stockholder introducing a proposal or making a presentation today would also have received a written copy of the rules of conduct for this annual meeting. However, no proposals were submitted, and no stockholder or presentations will be made at this annual meeting. Stockholders attending the meeting via the live teleconference or webcast are not permitted to participate actively, and therefore, have not received a copy of the rules of conduct. This annual meeting shall be conducted in accordance with the rules of conduct.

Mr. Stephen Crabb, the representative of the Inspector of Elections has elected to attend the meeting in person to make his presentation.

Attending today's annual stockholder meeting, either in person or remotely are David Smith, Director and Executive Chairman, attending in person; Dr. Fred Smith, Director and Vice President; J. Duncan Smith, Director, Vice President, Secretary; Robert Smith, Director; Daniel Keith, Director; Dr. Benjamin Carson, Director; Howard Friedman, Director; Benson Legg, Director; Laurie Beyer, Director; Jason Smith, Executive Vice Chairman; Rob Weisbord, Chief Operating Officer and President of Local Media; David Gibber, Executive Vice President and Chief Legal Officer; Billie-Jo McIntire, Vice President, Corporate Finance; and Stephen Crabb, BetaNXT Inc., inspector of Elections.

At this point in the annual meeting, I would like to provide a brief state of the union of our company, but first, Billie-Jo McIntire will deliver the safe harbor statements.

Thank you, Chris. As a reminder, certain matters discussed on this call may include forward-looking statements, including future operating results which are subject to a number of risks and uncertainties. I remind you that the actual results in the future could differ materially as a result of various factors, which can be found in our SEC reports, including the risk factors in our annual report on Form 10-K. The company undertakes no obligation to update these forward-looking statements.

Thank you, Billie-Jo. We thank our investors for joining us today. As we reflect on 2025, I'm pleased to report another strong year from Sinclair. Our management team was keenly focused throughout the year on execution and momentum in our core business. At the same time, this year may also be remembered as an inflection point for the industry. The regulatory environment is evolving. Policymakers and political leaders have expressed support for greater flexibility in broadcast ownership and the strategic logic for consolidation has never been clear. Scale, efficiency and capital strength increasingly matter in today's competitive media landscape.

Through disciplined execution in our core operations, strengthened liquidity, extended debt maturities and portfolio optimization, we have positioned the company not only to perform, but to act should value-creating consolidation opportunities emerge. Broadcast television remains the most powerful and efficient medium for live reach in America, yet structural limitations on ownership have historically constrained rational scale.

Today, the environment appears to be shifting. Recent public support from national policymakers for broadcast transactions signals a more constructive regulatory posture. Consolidation remains a key strategic objective for our industry and a logical evolution in a fragmented media ecosystem competing with scaled digital platforms.

Sinclair has long advocated for modernization of broadcast ownership rules. We believe more rationalized industry structure would benefit viewers, advertisers, communities and shareholders alike. The performance of broadcast television in 2025 reinforces our confidence in the medium's durability with 48 of the top 50 most watched telecasts airing on broadcast television. Live sports remain the most valuable programming assets in the entertainment ecosystem. No platform rivals broadcast on our reach, which is very important for sports.

Looking ahead, 2026 is a sports-heavy year for broadcast, including the Winter Olympics, which granted -- which garnered record ratings for NBC and a record number of World Cup matches airing on network television. Additional live sports rights returning to broadcast further strengthens the long-term relevance of local stations. This concentration of premium content reinforces both our advertising strength and our retransmission value proposition. In addition, our footprint includes numerous competitive Senate, gubernatorial and house races. Combined with the trust and reach of our local news operations, we are well positioned to benefit from robust political demand.

As an example of our strong local news operations, Sinclair won 246 regional and national awards in 2025 across our news operations. This included 17 national awards, 32 regional Edward R. Murrow Awards and 55 regional Emmys. This supports our expectation of record midterm political revenue in 2026 for Sinclair.

Our Ventures portfolio also continues to generate liquidity and optionality. In 2025, we realized more than $100 million in cash distributions, including the sale of 3 residential apartment complexes in the fourth quarter. We remain disciplined in monetizing minority positions and sourcing new majority investments.

Tennis Channel delivered solid revenue growth and improved profitability with March of this year seeing record levels of viewership for the network. Meanwhile, EdgeBeam Wireless, our NEXTGEN joint venture with Nexstar, Gray and Scripps achieved a key milestone by onboarding its first revenue customer for data delivery services, expanding its leadership team and advancing commercial demonstrations. NEXTGEN Broadcast technology remains a long-term opportunity to unlock new spectrum-based revenue streams from data casting to enhance positioning services, extending the value of our broadcast assets beyond traditional advertising.

We entered 2026 guided by 5 clear pillars as we remain focused on sustainable shareholder value creation: continued execution and momentum in our core broadcast business; high visibility revenue supported by resilient distribution, stable core trends, record political demand and a sports-heavy calendar; a disciplined deleveraging road map supported by extended maturities and enhanced liquidity; strategic preparedness for industry consolidation in a favorable regulatory environment; and ongoing venture value realization and innovation.

In closing, I would like to extend my sincere gratitude to our employees for their dedication, our management team for disciplined execution and our shareholders for their continued confidence. The results we achieved in 2025 reflect the strength of our business as well as our creative, innovative and entrepreneurial spirit and our ability to adapt to an ever-changing media landscape. We are incredibly excited about the future for Sinclair and the opportunities that lie ahead. Mr. J. Duncan Smith, Corporate Secretary of the company, will now report on the mailing of notice and other formalities.

Thanks, Chris. I wish to submit the following: a copy of the printed notice of this annual meeting dated April 23, 2026, stating the time, purpose and place of meeting. The complete list certified by the company's transfer agent of holders of shares of common stock of the company as of the closing of business on March 16, 2026, which is also the record date fixed by the Board of Directors for shareholders entitled to notice of and to vote at this annual meeting. The affidavit of the company's transfer agent, showing that a copy of the notice of the annual meeting was mailed in accordance with the bylaws of the company to all shareholders of record.

I now order that the materials submitted by the Secretary be made part of the minutes of this annual meeting. BetaNXT Inc. has been appointed as Inspector of Elections to tabulate the shares of common stock represented in person or by proxy at this meeting as well as to tabulate the votes cast for each proposal to come before the meeting. I would like to introduce Mr. Stephen Crabb, the representative of BetaNXT Inc. As indicated earlier, Mr. Crabb is attending the meeting in person. Mr. Crabb, are you prepared to report on the number of shares of common stock that are present either in person or by proxy?

Mr. Chairman, as of the record date of March 16, 2026, there were 48,254,031 shares of Class A common stock and 23,755,236 shares of Class B common stock entitled to vote on each of the proposals. Each of such A shares is entitled to 1 vote each to the proposals and each of the Class B shares is entitled to 10 votes. There are 265,043,845 Class A and Class B shares present in person or represented by valid proxy at this meeting.

As noted in the proxy statement, stockholders attending this meeting live or via the live teleconference or webcast are not deemed present at the Annual Meeting unless they are represented by a valid proxy. A quorum will be present if 142,903,198 votes are present at this annual meeting, either in person or by proxy. Based on the report of Mr. Crabb, I hereby declare that a quorum is present at this meeting.

The 3 proposals submitted for stockholder action at this annual meeting are fully explained in the proxy statement. As noted in the proxy statement, stockholders attending this meeting via the live teleconference or webcast are not able to vote via the live teleconference or webcast nor are they able to revoke their proxy. However, any previously submitted proxies are deemed voted and will be included in the tabulation of balloting.

The first proposal submitted to the stockholders for action is the election of 9 directors to serve for 1 year and until their successors are duly elected and qualified. The 9 directors who received the most votes will be elected. This is called a plurality. If you have withheld your vote on the proxy card, your vote will not count for or against the nominee. Broker nonvotes are not counted as votes cast for nominees and will not affect the outcome of the proposal. I will call upon Secretary, J. Duncan Smith, who will present the names of those persons nominated by management.

Thank you, Chris. Those nominated for election as directors of the company to serve for the term of 1 year and until their successors are duly elected and qualified are the following: David D. Smith; Frederick G. Smith; Jay Duncan Smith; Robert E. Smith; Laurie R. Beyer; Benjamin S. Carson Sr.; Howard Friedman; Daniel C. Keith; Benson E. Legg.

You have heard the motion. Are there any other nominations? Hearing none, I declare the nominations closed. Is there a second?

I second.

We will now move forward with the vote. The second proposal submitted by the stockholders for action is the ratification of the Audit Committee's appointment of PricewaterhouseCoopers LLP as the independent auditor of the company. An affirmative vote of the majority of votes cast is required to ratify this proposal. If you abstain from voting, your abstention will not count as a vote for or against the proposal. The Audit Committee previously recommended to the Board of Directors that the board ratify the Audit Committee's appointment of PricewaterhouseCoopers as the company's independent auditors for the year ending December 31, 2026, and the directors also unanimously have done so.

Laurie Beyer, the Chair of the Audit Committee, will further address the stockholders at this time.

Thank you, Chris. So the Audit Committee is assigned the responsibility for the selection of independent auditors for the company. The Audit Committee has discussed the proposal received from Pricewaterhouse with members of the firm and was satisfied that they have the qualifications and experience to handle the audit of the company and its various subsidiaries. Based on these discussions with management, the Audit Committee agreed that it was in the best interest of the company to continue to engage with PricewaterhouseCoopers as its independent auditors and so notified the Board of its direction.

Based upon the recommendation of the Audit Committee, the Board unanimously ratified the appointment and has recommended that PricewaterhouseCoopers be the independent auditors for the company for the calendar year December 31, 2026. The Audit Committee will continue to work closely and regularly with the company's independent auditors and will periodically evaluate their work to ensure its quality. I move for the ratification to stockholders of the appointment of PricewaterhouseCoopers as the independent auditors of the company and its subsidiaries for this calendar year.

You have heard the motion for the ratification of the Audit Committee's recommendation. Are there any questions or further discussions needed?

Hearing none, is there a second?

I second.

We will now move forward with the vote. In accordance with the Dodd-Frank Wall Street Reform Act and the Consumer Protection Act of 2010, the third proposal submitted to the stockholders for action is a nonbinding advisory vote on our executive compensation. This resolution is contained in Proposal 3 of the proxy statement. The company believes that its executive compensation is tied to individual and company's performance and is designed to support the company's long-term success by attracting and retaining talented senior executives and aligning their interest with the interest of our stockholders. We have provided detailed information on our executive compensation policy and procedures as well as the actual compensation paid to our named executive officers in the compensation discussion and analysis and the related tables and narrative in the proxy statement.

All compensation programs for named executive officers are reviewed by the Compensation Committee. The Board of Directors and the Compensation Committee, both value the opinions of our stockholders and will consider any stockholder concerns and whether any actions are necessary to address those concerns. With this in mind, we currently conduct an advisory vote on executive compensation every year. And following its annual meeting, we expect to conduct the next advisory vote at the 2027 Annual Meeting of Stockholders. This say-on-pay vote is advisory only and is not binding on the company.

For all the reasons stated in the proxy statement, the Board unanimously recommends that the stockholders vote for the resolution contained in Proposal 3 of the proxy statement and approve on an advisory basis, the compensation of the named executive officers as disclosed in the proxy statement. An affirmative nonbinding advisory vote of the majority of the votes cast is required to approve on an advisory basis, the say-on-pay resolution contained in Proposal 3. If you abstain from voting, your abstention will not count as a vote for or against the proposal. You have heard the resolution for a nonbinding advisory vote on our executive compensation.

Are there any questions or further discussion needed?

Hearing none, is there a second?

I second.

We will now move forward with the vote. Will the representative of the Inspector of Elections, please report the results of balloting.

For proposal 1, each nominee for director nominated by the Board of Directors has received a plurality of the votes of the shares present in person or represented by proxy entitled [Technical Difficulty].

For proposal 2, a majority of shares present in person or represented by proxy and entitled to vote have voted to ratify the appointment of PricewaterhouseCoopers LLP as the company's independent auditors for the fiscal year ending December 31, 2026.

For Proposal 3, a majority of shares present in person or represented by proxy and entitled to vote have been voted on an advisory basis for the approval of the company's executive compensation.

Thank you. I now declare that: one, the nominees for directors have been duly elected; two, the appointment of PricewaterhouseCoopers LLP to audit the financial statements of the company and its subsidiaries for the year ending December 31, 2026, has been ratified; and three, the nonbinding advisory vote on the company's executive compensation was approved.

I direct that the results certified by the inspectors of elections be attached to the minutes of this meeting made a part thereof.

Now we come to that part of the agenda for general questions and discussion. Does anyone present have questions? If so, please submit them now and raise your hand to be recognized. Yes, sir.

I know it's in the annual report, but can you summarize what the earnings were for this year compared to last year and also the number of affiliated stations this year versus last year and what the plans are for the coming year?

All right. So 2025 versus 2024, I don't have that right handy in terms of like the year-over-year comparison. But I think what's important to remember about that comparison is 2024 was a presidential election year. So when you're looking at '25 versus '24, you're going to see that revenue was down. EBITDA was down, and you're going to see that pick back up here in '26. I don't have the numbers right in front of you, so I'm not going to quote the exact percentages, but they are in the annual report in the 10-K that was filed earlier this year.

In terms of number of stations, we are currently at, I think, 181 stations in 81 markets. That is our current count in terms of number of stations and markets. That has changed a little bit over the last year. We've had a few transactions. We've bought in some partner stations. We have bought a station in Tulsa and then also one in [ Providence ] over the last or so. And those have all been very accretive and have contributed to a significant amount of growth here in this -- in Q1 and a beat in terms of our expectations that we just recently announced. But nothing dramatic in terms of overall change in numbers.

As I stated earlier in my prepared remarks, we see a constructive environment from a political and regulatory perspective federally. As you -- if you're watching the industry, you'll have probably noticed that one of the largest deals in the space, Nexstar and Tegna, did get federally approved and closed, but is now being challenged at the state level and currently under a preliminary injunction, which is something that we and everyone in the industry is closely watching to see how that plays out.

But what the important thing is from a regulatory perspective is that it did achieve approvals from both the FCC and the DOJ with no required divestitures from the DOJ and very -- well, 6 very minor divestitures required from the FCC. And that is a -- that was the change we were looking for, quite frankly, from a regulatory perspective that I referenced earlier in terms of more constructive environment.

And although this state component is certainly a new element that we're paying close attention to, now that we see how this is playing out, we think we can significantly mitigate that challenge in the future, and we're actively looking for merger partners and acquisitions where we can significantly scale up our number of stations.

As I stated earlier, we see ourselves in a large and ever-changing media landscape that has significant competitors in the form of digital platforms. And one of the best ways to compete effectively there and create more shareholder value is to scale our operations significantly. So we are looking to do that very actively.

Any other questions? Okay. There are no other questions I see in the room. And if there are no other business, the Chair will entertain a motion to adjourn.

I second.

All right. The meeting is now adjourned. Thank you.

Thank you very much. This does conclude today's conference. You may disconnect your phone lines at this time, and have a wonderful day, and we thank you for your participation.

Okay. We'll get started. Happy to have back at the conference from Sinclair, Chris Ripley, President and CEO. Chris, thanks for being here.

So Chris, you've been leading Sinclair through a period of significant strategic change, including portfolio optimization, venture separation and progress and active pursuit of industry consolidation. Maybe can you set the stage for investors on where the company sits today and what you're most focused on as you look to the rest of 2026?

Thanks, Dan. So look, I think the focus for us is around core execution. You saw that in our Q1 results where core advertising was up 4% year-over-year, retrans was up 2% and adjusted EBITDA was up 12% year-over-year. So we really do feel like we are executing exceptionally well on the core business, and we want to continue to do that. We, of course, also want to delever. You saw us do that in April, where we retired $165 million of term loans at a discount. And we want to transform the business through M&A and AI.

So M&A, I think we'll probably talk a little bit more about that later on, Dan. So I don't want to steal your thunder, but there are several opportunities that we see on the horizon that could yield significant synergies, and we're very focused on that. And we think that there's a lot that can be done with the business through AI. When you think about media businesses in general, but specifically broadcast, there's a lot of people in front of computer screens. And we don't deal with any sort of atoms, right? We just deal with bits. We think we'll need creators in the field, learning and reporting and getting information about their local communities. But beyond that, a lot of what we do could be done with AI.

And then our other objective is to grow Ventures. We are very focused on Tennis Channel right now with the new leadership from Jeff Blackburn. He's revamping the whole digital strategy and the streaming app. If you can take that streaming app from up to 1 million to 2 million subs, it's a huge value driver for Tennis Channel. And I think he's got runway to do that.

Digital Remedy, is also growing quickly organically and pursuing a number of inorganic opportunities. We basically over doubled the business last year via an acquisition. We want to double it again. It's a Rule of 40 company. We think that could be a $1 billion-plus asset. And then we want to continue to monetize our minority investments, and look to redeploy into new secular growth areas where areas that fit our DNA, like roll-ups, low-tech risk, low international risk where we can develop new platforms.

That was a great overview. I think we'll circle back to a few of those topics. So let's start with ads. So Q1 earnings, you reaffirmed your full year core advertising guidance. I think you had also flagged a bit less visibility in parts of the market tied to the geopolitical uncertainty we're seeing. Can you help us understand kind of what you're hearing from advertisers today at the latest, how the tone has shifted, if at all, since April?

David, Narinder here. I'll take that one. Nice to be here.

Sorry. I should have introduced, he came up after we started. Narinder Sahai, CFO.

Yes, David, thanks for the question. So the tone we flagged in Q1 was a real one, right? So when we built our 2026 guide and we provided a full year guide in February, we baked in a reasonable amount of caution on macro, right? What's evolved since then is the layering on of additional uncertainty, right? The Middle East conflict, elevated gas prices, ongoing tariff dynamics, which are weighing on a few specific categories.

We are hearing more measured commentary from our advertisers of forward visibility into the second half. But the data is still consistent with our plan. So while the tone is measured, we just don't want that tone to be viewed as alarming, right? So as you referenced, and as Chris mentioned, Q1 core was up 4% ahead of our internal expectations. The softness that we see is concentrated in consumer discretionary exposed categories, which are category-specific. It's not a broad cyclical retreat. We are not seeing large advertiser pullback on any of those categories.

And then if you look at the upfronts and you look at the buyer sentiment, that's very constructive. They are planning to spend more in advertising for the third consecutive year. So our second half is also structurally well positioned, and we'll perhaps get an opportunity to touch on that a little bit. We are overweight on FOX, on the World Cup, political crowd out will lift the rate in the back half of the year. Digital Remedy, our ad tech platform is helping us capture demand across the digital and the connected TV platform as well as linear. So our tone is appropriately watchful. We reaffirmed our full year guide. So we still feel very confident about that.

So at least part of the back half, but it touches your second quarter as well as the World Cup, just weeks away, 70 matches on your FOX affiliates, I think 40 are in prime time. Can you walk us through how you see the World Cup flowing through to your business? How is demand shaping up relative to your expectations?

Yes. As you referenced, this is -- the World Cup on FOX this year is the expanded format. It's in the same time zone. And 40 of those matches will be in prime time in the window that runs from June 11 to July 19. And I remind everyone that this is the first summer World Cup on U.S. soil since 1994, right? The last World Cup was not even in summer time frame. So this is -- obviously, there's a lot of excitement around this.

If you look at some of the numbers for FOX and Telemundo, their national in-game inventory is essentially sold out. And you also hear about the additional expanded inventory that's available because of the hydration break that the FIFA authorized. So all of that has a spillover effect into local markets, and we are seeing demand kind of firm up there. So we are super excited about that.

Obviously, we have an opportunity there to provide a cross-platform solution to our local advertisers around the World Cup. And then, what could be an upside here is the U.S. men's team runs deep in this tournament. So that could be very exciting and could open up some additional opportunities. So we feel very good about where that's positioned. But I think overall, if you look at the overall advertising revenue, it is still not a very large part of it. I just want to ground people in that while it's Incremental, this year, I mentioned, this has not been on the U.S. soil and the last one was not even in the summer. So it is incremental, but it's not materially large.

And while the hydration break sounds like a small thing, it essentially introduces an ad pod into what was essentially, right, you had the pre-roll and you have the half time so.

Yes. So it's actually 10 additional hours, which is quite significant.

Maybe switching gears to political. Your guidance calls for at least matching the 2022 pro forma figure with the prior midterms. We're now seeing early spending ramp. Curious how has your assessment of this cycle evolved over the past couple of months?

Yes, good question. So we are really encouraged with all of the signs we are seeing from fundraising, which is at record numbers. Spend, if you compare to last cycles at comparable times in the cycle is ahead. So all of those markers are positive. And our full year guide, as you know, as you mentioned, is to at least match what we did in the 2022 cycle. But I would say the forward indicators are leaning positive, so which is encouraging.

But I would also say that, it is too early for us to call it any different than what we did at the start of the year. I think as we progress through time, especially the second quarter into the third quarter, I think we'll probably have better visibility. And if that necessitates, we need to change our view and outlook, we'll talk about that. But we are very well positioned in the swing states. We have 26 stations in the swing states from all the major races in Michigan and Maine, and Ohio and North Carolina, to Texas, to Georgia, to Nevada. So we are very well positioned there. There's a lot of money being raised that will be spent there. So all in all, very positive.

And then if you look at generally our viewers, and it's a very interesting fact, 1/3 of them are Republicans, 1/3 are dems and 1/3 are independents. And they skew a little bit to the older side. So these are the people that you actually want to reach when you want to have a good bang for your buck on your political ad spending that these are the people that are going to go out there and vote. So all of that sets up really well for us. And so we're super excited about that.

Maybe as a follow-up, right, anytime you talk about political, there's always the attendant question around crowd out, but Sinclair did take concerted actions, I think, in the last cycle, presidential cycle to sort of limit that. Can you just maybe remind us on that?

Well, look, I think we -- crowd out is always an interesting topic. We have a yield team now that back in '24 was fairly new. We didn't have that in 2020. And we have found that when -- if we are very active in managing not only pricing but inventory categories, we can do a good job of mitigating crowd out. That being said, there always is crowd out in the fourth quarter, especially because you've got this doubling, right? Roughly speaking, Q3 is double Q2, and Q4 is double Q3. And Q4 is only about half a quarter of activity. So inevitably, there is crowd out, that's unavoidable in Q4, and there should be some in Q2, Q3.

Got it. Let's shift over to distribution. At earnings, you had noted over 100 basis points of sequential improvement in traditional MVPD churn in the quarter. I guess what's your take on the sustainability of this trend? And then on the virtual side, how do you view the potential impact of new skinny bundle offers like the ones we've seen from YouTube recently?

So the short answer is that we think it's very sustainable. And we think it's just the start of a significant trend, which was sparked by Charter's rebundling strategy, what we term the great rebundling. And when you take a look at the economics to the consumer, it has significantly changed the value proposition. The consumer is now paying about $20 to $30 a month for legacy cable, which would be the broadcast channels and a handful of cable channels. And the old value proposition was that was like $100. So -- and then how you get there is all these streaming packages that are being bundled in, if you subtract the value of those streaming packages, which are coming included with the expanded basic, and you net those down, you get to $20 to $30 a month.

And so from a consumer perspective, the value proposition is completely different. We're just at the beginning of this trend. Charter literally just put this in place last year. Their marketing campaigns have just commenced over the last 12 months. I would say that consumer awareness is still relatively low about this value proposition. So we are very bullish about what they've done about consumers realizing all the extra value that is now being deployed, about them continuing to improve the user interface and experience of being able to access this content, and then other MVPDs copying the strategy.

So we did benefit from improvements at Comcast, but Comcast really hasn't copied the strategy yet, but we think they will. And we think other MVPDs will because it's just so apparent that Charter is outperforming everyone else. And so we're very bullish on that. We do think it's a sustainable trend.

On your question around skinny bundles, bring them on, right? It would be great if YouTube TV launched more skinny bundles from what we have -- we understand the broadcast stations are in all those skinny bundles. So to the extent that this allows more people to stay in the pay TV ecosystem because they're at lower prices, fantastic.

So Sinclair has 3 major network affiliate renewals coming up later this year, I think, in August, October and December. The prior few years have seen broadcast network owners increase investment into streaming platforms, which share some content with you. So how does that dynamic shift negotiations around programming costs?

Well, it's really central to the entire discussion. All of the -- all of our network partners have a streaming platform now. FOX was the last one. They launched FOX One last year. And when you analyze what content is being put on those streaming platforms and who pays for the content, essentially, the answer is all the content is on the streaming platforms and on broadcast. And very little is paid for by the streaming division relative to the broadcast division. So there is a big mismatch in terms of the allocation of cost for the content that is now being exploited on 2 different platforms. And that rightsizing is, we think, going to be beneficial in terms of managing the cost of our network relationships.

So the timing of the affiliate deals is interesting, especially given the NFL's possible intention to reopen its rights agreements. Sinclair also has a large renewal footprint on the distribution side coming due in 2027. So look, it's certainly possible nothing will happen with the NFL. But assuming there was an increase in the NFL rights fee, how do you think about what the networks would ask the affiliates to pay? And then in turn, what you might ask for the MVPDs. And I guess it's a roundabout way of me asking, how do the economics of the NFL ultimately get pushed all the way through the ecosystem?

Yes. So look, I think it goes back to my prior -- your prior question, my prior answer. That any increase in NFL payments are going to have to be largely absorbed by the streaming side of the house for these media companies. And we saw that happen with the NBA. So the best comp that I can point you to was the new NBA deal that NBC did, I guess it was 1.5 years ago now. And we set our expectations. So that was 2024. We set our budget and expectations for our renewal with NBC at the beginning of 2024. The renewal was at the end of 2024, and the NBA deal was in the middle of 2024. And so one would have expected that NBA deal to have impacted the results of our renewal. And we ended up hitting and in some cases, in some areas, exceeding our expectations, which were set at the beginning of 2024.

So the reality is we didn't know about this NBA deal when we set our expectations, and we still hit our expectations after the NBA deal was put in place. And we are now benefiting from that NBA content being on our NBC stations. And so the only logical answer to all that is the streaming side of the house paid for the new NBA deal. And we expect that to be the answer also with the NFL.

Maybe let's shift over to the regulatory environment. So the industry is at a really interesting moment in that we've seen the FCC and DOJ approval of some major M&A, but also legal challenges to those deals. So where do you think the industry stands at this moment? And are there further actions that those agencies can take to help ease the go-forward process for others?

Yes. So look, I mean, nothing short of a monumental change in the regulatory environment over the last few months. And really highlighted by the change of the DOJ. The fact that, there were no required divestitures between on the TEGNA, Nexstar merger is a complete seat change at the DOJ. And we've been harping on this for probably a better part of a decade on expanding the market definition. And we finally got there. So it's amazing, really. And it just -- it's hard with regulators because they're always looking backwards, right? They're always looking in the rearview mirror. And so that was really momentous, and we're super excited about that shift.

We already had a constructive FCC. There's still a little bit of work left to do with the FCC, right? And we expect some of those rules to actually be changed like the cap, for instance. So we're -- the industry is still working on getting that sort of done and dusted. But the FCC has -- is already in a very constructive place from an M&A perspective. And then so now what's going on the state level, which is kind of a new attack vector that some of our commercial adversaries like DIRECTV are utilizing to extract tax on transactions.

Now that we've seen the playbook, and this is a fairly new playbook that has been developed, I think we believe we can significantly mitigate it. And then to your point, Dan, you said are there actions the agencies could take to also mitigate what's happening at the state level? Absolutely, right? For one, not relying on waivers, but having the rules changed at FCC is something that we're focused on, and that would help. But the -- what's going on at the state level is primarily an antitrust issue, not an FCC issue. And the argument that retrans is a local -- the marketplace for retrans is a DMA, is preposterous really. Carriage is negotiated on a national basis. I mean -- and we think that your -- if this were to ever actually go to trial, I don't know whether it would, but that they would lose, because the facts in the industry are just so vastly different. And -- but what could -- to go back to your question, what could the DOJ do? Well, the DOJ could put out a white paper on this new market definition, which has clearly expanded. So that's another area of focus for us as we think about larger transactions.

Just staying on that topic, you remain -- Scripps, I think their largest shareholder. And you've said recently the industrial logic of a deal there is unchanged. Just maybe update on where things stand. And in absence of that moving forward, how are you thinking about other potential opportunities?

Yes, we do remain the largest shareholder of Scripps. We reiterated in our last call, as you noted, Dan, that the industrial logic is still the same. It's very strong, and we are open to further engagement there. That being said, we're not sitting on our heels. We are focused on other opportunities. There are several other alternatives that could yield similar sized synergy numbers to Scripps. So those are the ones that we're doing work on now and looking to bring those too ahead.

Got it. So the Ventures separation work has been underway for several months, carve-out financials, audit work, et cetera. Can you give us a sense of where you are in that process? And I think you've described the ideal sequence as a spin concurrent with the broadcast deal. But at what point would you consider proceeding with the spin independently if a transaction wouldn't materialize on your preferred time line?

Yes. Good question. So before I answer that, I just want to remind our listeners what Ventures actually is. Ventures has Tennis Channel, which is wholly owned. We are seeing great traction with Tennis Channel, and I think that could very easily be a $1 billion asset. It's got Digital Remedy, which is our performance advertising, digital advertising platform, which is DSP agnostic, which allows us to bring cross-platform solutions. It's growing very rapidly, has a large subset of acquisition opportunities and organic growth in front of it. That easily could be a $1 billion asset in the next 3 to 5 years.

Then Ventures has our intellectual property on ATSC 3.0. And I will tell you that all roads to commercialization and monetization of ATSC 3.0 runs through that IP, that Sinclair has created. And then you have $450 million of cash and roughly $500 million of minority investments, which, as we have outlined, we are very focused on monetizing those minority investments and move to majority controlled businesses, which have stable cash generation recurring revenue streams. And that process is underway.

So all this to say that we are very focused on unlocking the value in the Ventures, which we don't believe is currently fully reflected in our stock price. So the whole idea of separating Ventures is geared towards that. So the work is underway, as you mentioned. We have an accounting firm that we have selected. They're working through preparation of the carve-out financials. The auditors are engaged to audit that work. We have internal teams formed working on different aspects of a separation. So all of that is proceeding as planned and gives us a lot of optionality that when the time comes and we need to pull the trigger, that we are ready, that we have done the homework, right?

Having said that, our ideal scenario remains a broadcast combination, in conjunction and followed by a Ventures separation. And we are saying that we want to -- that is an ideal scenario because it allows us to preserve optionality of having ventures in the portfolio. A couple of reasons, Ventures has cash. So if cash is needed to facilitate a broadcast transaction, that's there. As I referenced, Tennis Channel could be attractive in a broadcast combination transaction. So we want to preserve that flexibility as long as possible. And as Chris mentioned, we are working very hard on a broadcast combination. So in the future, as if the paths diverge and we cannot reach our ideal scenario, then we'll be looking at all options to unlock the value in Ventures.

Maybe just staying on Ventures for a second. So Tennis Channel had a strong quarter with viewership up meaningfully and DTC subs seeing traction after the launch on Amazon. Can you just walk us through where you see Tennis Channel in a few years' time and kind of what the investment road map looks like?

Well, Tennis Channel, we think, is a very valuable growth asset in our portfolio. It has opportunities around direct-to-consumer, international, streaming channels like T2 and also Pickleballtv. It actually has an evergreen rights vehicle for the PPA and MLP TV, which is a 50-50 JV. So there's a lot to like about Tennis. The rights are relatively inexpensive in sort of the sports landscape. The amount of interest and engagement in tennis has grown significantly here in the U.S. and continues to be on a great trajectory.

And the real opportunity that we see within specifically Tennis Channel is to grow the direct-to-consumer streaming business more than anything else. We brought in Jeff Blackburn, who had an amazing career at Amazon. He basically created the Amazon Ads business. He oversaw Prime Video. And he is revamping the whole digital strategy, redoing the apps. It will all be revamped by the end of the year. And he is going to take that streaming business up to over 1 million subs. And if he does that, Tennis Channel financially and from a valuation perspective looks entirely different. So that's the near-term opportunity that we see on Tennis Channel.

Let's shift to ATSC 3.0. So right here in Boston, there's a company called EdgeBeam, where Sinclair is a joint owner with other broadcasters. EdgeBeam is in the market now for what it terms custom solutions for the last mile connectivity. Can you help frame for investors what the commercial pipeline looks like today and what milestones we should be watching for?

Well, yes. So EdgeBeam is really moving quickly and building a great team to commercialize what largely had been POCs that the industry had done. They're hardening those. They're building out the right sales and support, the whole organization that you need to go into these new areas. The areas of focus that they are focused on are positioning and timing. So precise time and position, there's enhanced GPS, there's the backup to the GPS system, which ties into that. Digital signage is another area, public safety and streaming offload and automotive.

And in each of these use cases, the TAM when you sum it up, is greater than the entirety of the television broadcast sector. So this is allowing us to expand into areas with a much bigger playing field than what we have today. And these are new areas, and it will take some time, but EdgeBeam is moving like a start-up quickly looking to scale. And I think the business will end up scaling to something quite significant over the next 5 to 10 years.

On Sinclair as an organization and earnings, Narinder, you highlighted the application of AI, not merely as a cost reducer, but as a tool to fundamentally reinvent how the company executes. I'm curious where are you finding the most current applications? And what are the main opportunities from here?

Yes. Great question. Thank you for that, David. So as I mentioned, AI's value at Sinclair isn't just headcount rationalization. It is actual -- it's actually fundamentally reinventing and reimagining and rewiring our core processes, right? Cost discipline is one output, but the more interesting applications of AI sit on the revenue side.

To recap kind of what we have been doing there, we have meaningful applications already in production. We were the first broadcaster to implement live AI-powered language translation of local newscasts running in 4 different markets. We are translating podcast content, specifically with Tracy McGrady and Vince Carter into Chinese for distribution in China, which opens international audiences for the U.S.-only content. And on the Digital Remedy platform, artificial intelligence is key there because it helps with running the entire campaign start to finish with optimization and attribution kind of built in. And we have obviously, AI productivity tools rolled out across the workforce, bottoms up and top down.

I guess looking ahead, the most meaningful opportunities are in repurposing content into multiple formats and languages, which AI will be very efficient in doing. Hyperlocal personalization at scale, advertising stack optimization, as I mentioned, using AI in how we manage yield and how we present proposals to our advertisers. And then obviously, the obvious ones are operational productivity across finance and scheduling and traffic.

I do want to stress here is that AI won't replace the foundational input. What is the foundational input in our business? It's the local journalist doing the original reporting, right? The feet on the street and the trusted local relationships, that's where the value originates. That cannot be replaced with AI. AI will amplify it, but it doesn't generate it. Content creators are the differentiators for us. And then editorial judgment is going to matter here. So there's lots to like here with AI. And we are not in the experimentation phase. We have made some strides to step into the production phase, and I expect us to make step changes here.

Okay. Great. With that, we're out of time. Chris and Narinder, thank you for being here.

Thank you, David.

Thanks, Dan.

Good day, everyone, and welcome to the Sinclair First Quarter 2026 Earnings Conference Call. [Operator Instructions]

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.

[Technical Difficulty]

And ladies and gentlemen, please remain on the line. We will reconnect the speaker to the conference room.

And good day, everyone. Welcome to the Sinclair First Quarter 2026 Earnings Conference Call. [Operator Instructions]

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.

Thank you. Good afternoon, everyone, and thank you for joining Sinclair's First 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 COO 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 & 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 first 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.

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 3. We delivered a strong first quarter, which results that reflect the consistency of the broadcast business and the growth potential of Tennis Channel. For the quarter, total revenue of $807 million was up 4% year-over-year, while adjusted EBITDA of $126 million grew by 13%. Distribution revenue increased by 2% year-over-year as modestly improved subscriber trends continued, and we're starting to see the benefit of our partner station buy-ins. Net retrans revenue was also up year-over-year.

In addition, we continue to see growth in our core advertising business. Core advertising grew 4% year-over-year in the first quarter, a result we were pleased with, given our underexposure to NBC, which delivered an exceptionally strong quarter due to its affiliates on the back of the Super Bowl, Winter Olympics and NBA. Looking ahead, Fox, our largest affiliation, will carry a record schedule of World Cup soccer matches on the broadcast network in June and July, ahead of the political ramp in the fourth quarter.

Turning to execution across our broader strategic priorities, we have built real momentum. We've now closed on a substantial majority of our JSA and Elma partner station buy-ins with only a small number remaining, and we expect the full $30 million in annualized synergies in 2026. We also recently completed 2 accretive duopoly transactions in Providence and Tulsa with several smaller portfolio optimization discussions underway.

Our strategic review of the broadcast business remains active. As previously discussed, our ideal path forward is a broadcast combination concurrent with a venture separation. We remain Scripps' largest shareholder, and our perspective on the strategic logic of the combination is unchanged from what we shared previously.

Within Ventures, the portfolio generated $12 million of cash distributions during the quarter, ending with $451 million of cash. That liquidity provides flexibility as we advance our adventure separation planning. As a result of our first quarter results and current forecast, we are reaffirming our full year 2026 guidance.

And finally, we continue to work to strengthen our balance sheet. Earlier this month, we retired approximately $165 million in term loans at a discount through an unmodified reverse Dutch auction. As a result, we will save approximately $12 million in annual cash interest expense. As evidenced by this transaction, deleveraging remains a top priority. We ended the quarter with total debt of $4.4 billion and total liquidity of approximately $1.5 billion, including total cash of $844 million.

We are pleased with our first quarter financial and operational results. Our team is executing with discipline across multiple priorities, and we are well positioned for the remainder of 2026.

The industry continues to await several important decisions that are now in front of the Federal Communications Commission. While the recent California litigation involving the Nexstar TEGNA transaction took up much of the broadcast regulatory headlines over the past few weeks and has introduced some near-term uncertainty on timing, we believe the broader environment remains constructive for local broadcasters, and we continue to feel optimistic about the direction of significant issues. Both the FCC and the Department of Justice approved the Nexstar acquisition of TEGNA with no material conditions, and we remain pleased with the overall deregulatory tone from Washington.

I won't rehash most of those other issues, which we discussed on our fourth quarter call in February, but one development is worth noting. In late February, the FCC launched an inquiry into the sports media marketplace, examining how streaming exclusives affect consumers, broadcasters and free over-the-air access.

Turning to Slide 5. Since the launch of the SEC inquiry on February 25, and well over 10,000 comments have been submitted on the SEC sports media marketplace inquiry, making it one of the most commented on inquiries and commission history. As every television viewer and sports fan knows all too well, the fragmentation of live sports programming is causing increasing customer frustration with both higher costs and confusion around where the games are televised. With 96 of the top 100 most watched telecast last year being live sports broadcast, including record ratings across almost every major sport, this has become an increasingly important topic for both consumers and regulators.

Broadcast delivers what no other platform can, the widest reach and the lowest cost to the consumer. The numbers make the point. The NFL Thanksgiving game on February drew 57.2 million viewers of the most watched regular season NFL game ever on Fox. The Amazon NFL game, the very next day drew only 16.3 million, same week, roughly 3.5x the audience on broadcast. Meanwhile, last year, NFL games aired on 10 different services, which according to some estimates could cost a consumer over $1,500 to watch all of the games even though the large majority of those games aired free over-the-air on broadcast networks.

Live sports is the cornerstone of the broadcast ecosystem. It drives mass audiences and it underwrites the financial model that sustains local television stations and the local journalism they produce. The migration of major sporting events behind streaming paywall is not just bad for consumers, it risks eroding one of the last shared viewing experiences we all have. And it pressures the very business model that funds local news and community programming. Maintaining broad and free access to live sports should remain a top priority for policymakers as they continue to examine this issue that has clearly struck a nerve with viewers and policymakers across the country.

With that, let me turn the call over to Rob to discuss operational highlights in the quarter.

Thank you, Chris, and good afternoon, everyone. Let me walk through our operational performance and how we're positioned heading into the remainder of 2026, starting on Slide 6. We delivered solid growth in core advertising with first quarter core revenue up 4% year-over-year, driven by the strength in Digital and our acquisition of Digital Remedy. Advertisers continue to prioritize platforms that provide scale, interactivity and live engagement and broadcast consistently delivers on all 3.

Notably, our NBC affiliates delivered very strong results, benefiting from the convergence of major big sporting events. The Super Bowl was the second most watched telecast of all time in the U.S. The Winter Olympics were the most watched. Winter Olympic gains in 12 years on broadcast television, and the MEA continues to deliver solid ratings for the network. While we are underway NBC, we are overweight Fox, which is our largest network affiliation, and we are already seeing strong demand for the FIFA World Cup soccer tournament of box this June and July. Notably, 70 of the 104 total matches will live on the linear Fox broadcast stations with 40 matches scheduled for prime time. This is exactly the kind of appointment viewing broadcast is built for, delivering mass audience with unmatched reach across the country.

Our core advertising continues to benefit from Digital Remedy, our programmatic digital advertising platform. As ad dollars increasingly shift across linear, Connected TV and digital, Digital Remedy allows us to capture demand across all those channels rather than being limited to linear. That matters in the political side world, too.

Beyond linear, we continue to see engagement growth across podcasts and social platforms. Recent activations like the Tailgate Tour, and the block demonstrate our ability to engage audience beyond traditional broadcast, while creating meaningful opportunities for our advertising partners. Our next activation will be at the World Cup, posted by unfiltered soccer stars, Landon Donovan and Tim Howe, 2 of the most cap players in the U.S. national team history.

In summary, Sinclair continues to execute well on its core broadcast business. Broadcast differentiated role is strengthened in a year like this, political and sports-heavy 2026 with both ratings and subscriber trends showing positive momentum.

Turning to Slide 7. Tennis Channel continued the momentum around live sports and delivered an exceptional quarter and a historic month of March. March 2026 was Tennis Channel's most watched month ever, led by the Indian Wells and Miami Open tournaments attracting record audiences Miami Open women's final between Avalanche and Golf was the most watched women's match in tennis channel history, breaking a viewership record set just 2 weeks earlier at the Indian Wells women's fine. In fact, 4 of the top 5 most watched matches of all-time at channel occurred in March as tensional household viewership increased by 19% year-over-year in the quarter.

In addition, Tennis Channel has hit record D2C subscriber numbers in recent weeks, driven in large part through its recent launch with Amazon Prime Video. TennisChannel 2, the network's fast channel which launched on Peacock in January, will continue to feature Women's Day every Tuesday, a programming day exclusively dedicated to women's, reinforcing our leadership in women's sports program. While we remain disciplined on expenses, we are also making thoughtful, high-return investments to support the long-term growth of the franchise, expanding our content rights portfolio, scaling our direct-to-consumer platform and building out TennisChannel 2 as well as our digital platforms. Tennis Channel is a differentiated premium sports asset, and we are investing behind it accordingly. We are fully bullish on the network.

Lastly, we continue to build out Amazing America 250 from neighborhood to nation, a multi-platform celebration of U.S. history, culture, innovation and community spirit. Programming will expand as we approach the 250th anniversary of our nation's founding on July 4.

Let me now turn the call over to Narinder to discuss the first quarter financial results in more detail.

Thank you, Rob, and good afternoon, everyone. Turning to Slide 8. I'm pleased with our first quarter results that reflect strong execution across the business. At the total company level, revenue was $807 million, up 4% year-over-year. Distribution revenue of $458 million grew 2%, supported by lower subscriber churn across key MVPDs and incremental benefits from our partner station buy-ins, both of which also contributed to growth in net retransmission revenue.

Core advertising revenue of $305 million also grew 4%, reflecting the contribution from Digital Remedy acquisition that closed in March of last year and continued strength in live sports, including the Winter Olympics and NFL playoffs.

Adjusted EBITDA was $126 million, up 13% year-over-year. The increase reflects both revenue strength and operating leverage with operating expenses absorbing the cost base from the Digital Remedy acquisition, while core operating costs remained well controlled.

In the Local Media segment, total revenue of $701 million benefited from the same distribution and advertising trends. Distribution revenue of $402 million and core advertising revenue of $261 million both showed modest growth year-over-year. Segment adjusted EBITDA of $117 million reflects lower programming and production costs, lower network compensation related to prior year station sales and disciplined SG&A expenses.

Within the Tennis segment, total revenue of $70 million was also up year-over-year. Adjusted EBITDA of $20 million was below last year's first quarter, reflecting an increase in sales and programming expenses as we continue to invest behind the network growth that Rob referenced earlier. Capital expenditures on a consolidated basis were $15 million. Overall, the quarter reflects broad-based execution, improving subscriber trends and solid advertising demand across the company.

Turning to Slide 9. I'd like to provide an update on Sinclair Ventures. Consistent with the strategy we previously outlined, Ventures continues to shift from passive minority investments towards majority control operating businesses with a focus on durable nondiscretionary and recurring revenue streams that convert strongly to free cash flow. Ventures generated $12 million in cash distributions during the quarter, primarily from the secondary market monetization of one of our minority investments, following the $104 million for the full year 2025. These distributions demonstrate our ability to monetize investments while preserving upside in the broader portfolio.

We also remain selective on new capital deployment with incremental investments of $6 million in the quarter. Ventures ended the quarter with $451 million in cash and cash equivalents. That liquidity provides a meaningful optionality as we advance separation planning and continue to evaluate capital allocation opportunities. Overall, as we advance our work towards a potential separation, Ventures continues to generate meaningful cash while repositioning the portfolio towards greater operational control and long-term value creation.

Turning to Slide 10. As Chris referenced earlier, in early April, we settled an unmodified reverse Dutch auction for our term loans, retiring $165 million in par value at a discount. The delevering transaction is expected to reduce our annual cash interest expense by approximately $12 million. Including borrowings under the AR facility, Toto Sinclair Television Group, or STG debt was $4.4 billion. Our nearest material maturity, excluding the AR facility continues to be in December of 2029. At quarter end, as defined in our credit agreement, STG net first out, first lien leverage was 1.5x, net first lien leverage was 3.8x and net leverage was 5.1x. Net leverage fell by 0.2 of a turn sequentially, and these figures do not yet reflect the April term loan retirements that I referenced earlier. We ended the quarter with $844 million in consolidated cash, including $392 million at STG and $451 million at Ventures, including revolver availability, total liquidity was approximately $1.5 billion.

Before turning the call back to Chris, let me briefly frame our first quarter results and outlook in the context of the broader operating environment. When we introduced 2026 full year financial guidance in February, we plan for stable core advertising trends, supported by a sports-heavy broadcast calendar while remaining appropriately cautious given macro headwinds in certain categories. Since then, given the conflict in the Middle East, the external environment has evolved. Consumer sentiment has moved meaningfully lower, inflation expectations have ticked higher and advertiser visibility in select areas is somewhat more measured than a quarter ago.

At the same time, the drivers underpinning our full year outlook remain firmly intact. A record midterm political cycle with competitive ratios across several of our key markets, the FIFA Software World Cup anchoring a sports-heavy broadcast calendar in the second and third quarters and steady distribution supported by moderating subscriber churn and expected benefit from our partner station by end that are now substantially complete. Based on that balance, we are reaffirming our 2026 full year guidance today.

Let me now turn the call back over to Chris for closing comments before we open the call to questions.

As we wrap up on Slide 11, let me briefly summarize our quarter. First, we continue to execute and build momentum on our core broadcast business. We delivered strong results across the board that translated into meaningful cash generation with stable core advertising trends, audience strength anchored by live sports and improving subscriber churn across key MVPD partners. Live sports continues to drive the kind of appointment viewing audiences that no other platform can match. Both the FCC and DOJ are now examining facets of the live sports broadcasting marketplace and we believe they are asking the right questions. Tennis Channel further reinforced this dynamic during the quarter, delivering 4 of the top 5 most watched matches in network history, alongside record growth in our direct-to-consumer product.

We also continued to advance our deleveraging priorities with STG net leverage improving in the quarter by 0.2 of a turn sequentially to 5.1x. We also allocated capital to retire $165 million in par value of our term loans at a discount. Looking ahead, we reaffirmed our 2026 guidance anchored by a resilient revenue mix, strong midterm political revenue expectations, a sports-heavy broadcast calendar headlined by the World Cup and continued cost discipline.

With that, operator, we are ready to open the line for questions.

[Operator Instructions] Your first question is coming from Steven Cahall from Wells Fargo.

Chris, it seems like with Nexstar, TEGNA, a big win for the broadcast. I think far more expanded definition of come into the 21st century. On the other side, we're seeing Nexstar and TEGNA tied up in some legal issues. So what do you feel like you glean from watching them go through these processes as you think about potential for M&A for Sinclair? And just a related one on this topic, you mentioned that you're still Scripps' #1 shareholder. My sense is that there's not...

[Technical Difficulty]

We lost you there, Steve, on not a lot of. Are you still there?

Yes, we can hear you now.

Sorry, let me try that again. So in the -- the DOJ is much more expansive view of the TV ad market, but now Nexstar is going through an interesting legal process. So what do you think [indiscernible] watching them go through this merger that informs your thinking on potential mergers and acquisitions. And then you mentioned you're the #1 shareholder of Scripps. Do you think there's a path there to continue to engage in the future?

Okay. I think I've got your questions, Steve. So the first one, as it relates to what's going on with Nexstar, Tegna, I think the -- what you first said, I think, is very important. We have seen an approval of that transaction from both the FCC and the DOJ with no conditions and no divestitures required from the DOJ. So that is a huge change in the way the DOJ has historically looked at our market, which was defined as just competition amongst local broadcasters. And they have finally come up to date with the realities of the current marketplace, which is that we compete across many different mediums, including cable and connected TVs. So that's a huge win and it's been a long time in coming, and it will be tremendously helpful to the industry going forward and pursuing a much needed consolidation.

As I've talked about before, we firmly believe under this rule set, which has now essentially been verified at both the FCC and the DOJ with a new large precedence, we're going to head towards a marketplace where you've got 2 large groups that the industry consolidates up to, which still will be relatively small in the TMT landscape, but will be much better competitors within that broader landscape as they improve on efficiencies and gain more access to better talent and open up business opportunities. So that's very exciting.

Now obviously, you noted the downside here is some of the issues coming up at the state level and specifically in California for Nexstar-Tegna. We do think that the case brought against that deal is very flimsy in terms of the merits. And we believe that now that we've seen the playbook, any future transactions, we can significantly mitigate a similar playbook in future transactions. And I think just there's a lot of unique features in the Nexer-Tegna deal, like it was essentially a #1 and #2 coming together, which certainly wouldn't be what you would expect in sort of mathematically can happen in the next combination. And there was a bunch of optics around the deal, which didn't look great, which we're very unique to this situation.

So we, of course, didn't want to see that happen and would rather Nexstar just proceed forward on a clean basis, but we have a lot of safe that they'll play through this. We don't think the merits transaction are sort of merit of a lawsuit is really there. And we do think future large transactions will learn a lot from this process and be able to significantly mitigate the risk.

And then as it relates to Scripps, the industrial logic is still there. Our position on the deal is still the same. As I mentioned in my remarks, we would be happy to pick up discussions again around such a transaction, but we are not standing still. We are looking at multiple other opportunities to achieve similar levels of benefits and synergies. So will keep moving. And if something were to materialize the Scripps, great. But if not, we're moving forward.

Your next question is coming from Aaron Watts from Deutsche Bank.

Just a couple of questions. One follow-up on the line you were just addressing. Given the noise or pushback that's being generated with getting the Nexstar transaction across the finish line, do you still expect the FCC to press ahead with trying to officially change or a bolus to the national ownership cap so that future deals don't have to rely on waivers?

Well, I do think that will happen. Of course, we -- that's up to the FCC. And certainly, as an industry, we have been lobbying for that. So it is something that I do expect will happen in the future. so that you don't have to rely on waivers.

Okay. I wanted to ask for a bit more detail around local media core advertising. Your rate of growth slowed down sequentially from 4Q into 1Q. I'm guessing Olympics played a key role there. But can you talk about other puts and takes? And then how is Q2 core tracking relative to what you saw in first quarter? Has the war had any discernible impact yet on your bookings, particularly in the auto vertical?

Yes. It definitely was sports related in the fourth quarter, Aaron. And so being underweight on NBC and based on our NBC performance, we know that market still was delivering on the core advertising. Fortunately, unfortunately, a lot of the weight move at NBC. And that's why as we head into World Cup and how we're overweighted on FOX, we're bullish on the end of second quarter going into third quarter by carrying 70 gains on the FOX network.

We're still comfortable with our guidance that we've given for the year on for. We will remain watching these headwinds, as mentioned in the scripts that consumer confidence is starting to wane. The gas prices are increasing. And so the cost of goods being shipped most likely will be going up, and we'll see that dominant effect. But we remain confident in our annual guidance that we will still achieve that guidance.

Aaron, just to add on to what Rob just mentioned. Also remember that these are as reported numbers, and we did have station divestitures to Rincon and Yakima [ newsroom ], which impacted the reported number on board. So keep that in mind.

Okay. But overall, it sounds like your full year view on core hasn't changed despite kind of these moving parts that you've outlined?

Yes. We're still comfortable with the full year view and as Chris mentioned and I mentioned, we're coming off of record or very high growth in live sports. And last ports between all our platforms drive significant revenue. So we're still comfortable with the annual outlook.

Okay. If I could squeeze one last one in, and I appreciate the time. Just around political. It sounds like still a lot of optimism on that front for the year. CTV was the big mover in terms of share in 2024, expected to grow further this year. Where do you think the share shift will come from going forward? Do you expect that broadcast TV can maintain its share? And can you also discuss the Campaign Finance limit case that's currently being debated in core? Help us understand how the potential outcomes could impact your political ad revenues, particularly related to the lowest unit rate or cost, if not for this midterm cycle, then potentially as we think ahead to '28?

Yes. I'll take the first part. We're comfortable. We think the shift to CTV, which is a natural shift that's coming from search and social and going into CTV. We have some TVB research with share cases on 18 plus demo, which is the voting demo, that if you extrapolate Amazon and Prime, which don't take political ads as well as YouTube, which is short video, that broadcast delivers 78% of the commercial inventory. And just recently, as we were talking earlier, I indicated that the faucets have now opened on broadcast political spend. We've seen significant buys from the GOP and the tax in North Carolina, just started to have their expenditures. They have $1 billion estimated political funds. So we think we're situated in the markets where there are highly competitive races to capture that -- those dollars.

And Aaron, in terms of your question around some of the back and forth on lowest unit rate cost. You've got this court matter. There was also a petition for reconsideration by the TBB around the recent FCC interpretation. And look, I think that all is important to some extent. I think there is a real case to question whether something like a lowest unit rate should -- is even constitutional. But that will all take some time to play out.

But I think what you should know is that we're not particularly concerned about that affecting the outcomes that we expect for the year. And that really plays into the dynamics of what goes on, on political ad spend. Number one, as I like to always say that politicians sort of return money to their donors once the elections are over. And so there's a real incentive to get advertisement on the air in the right places where it can impact voting, leading up to the elections, and that is unequivocally on broadcast television and more specifically, on our stations, which are in a lot of the battleground states and have a very large independent voter viewership that is -- has a high propensity to vote.

So our local news audience is highly coveted when it comes to political advertising and political advertisers end as things heat up, they tend to move into inventory categories, which have more protection in terms of their ability to be preempted. And those categories come with higher prices. And those don't tend to be where your general advertisers play. So we think that in terms of the yield component of this and the total demand, these things matter around the edges, but they will not have a meaningful impact on the outcomes.

Your next question is coming from Craig Huber from Huber Research.

My first question is, you mentioned a few times that you're seeing modestly improving subscriber trends. Can you maybe quantify that? I mean, on a same-station basis, will you down, say, roughly 4% year-over-year on your subs? They're reasonable?

So our overall subscriber churn in Q1 was mid-single digits. And that did have a very modest overall improvement. But more importantly, on the traditional MVPD side, we did see over 100 basis point improvement in churn there sequentially, and that is one of our biggest contributors. So we're -- it is improving and being driven by some of the larger MVPDs like Charter, leading the way with its streaming bundling strategy. We think we've talked a lot about in the past, it's a great strategy. It's working. You can see it in their numbers publicly. We're increasingly seeing it and what they report to us. And Comcast, it has also been doing better as well and really there the 2 bellwethers of the space.

Great. And my next question, if I could. Can you maybe touch on what your outlook is for your net retrans this year or if you want to do it on a 2-year basis? Can you share that with us?

So we do expect net retrans to grow over the long term. We haven't given any more specific guidance on net retrans. We do feel what the trends that we're seeing, as we talked about earlier, on subscribers, seeing modest improvement there on our network affiliation costs, which we're about to have a big year on the balance of power that we've talked about this in the past, and we feel like this trend is solid and intact with the balance in power has been swinging back towards the affiliates as the network play catch-up on retrans and the dollars there are very, very significant to the networks, really irreplaceable. And now you're seeing all the networks stream all of their content, even FOX now streams is content.

And so really, it's just a simple equation. When you think about they're monetizing their content on both broadcast and streaming but the cost is almost exclusively borne by broadcast. So just as there's a rebalancing that's happening within pay TV where broadcast audience well exceeds its share of the pay TV pie and our growth in gross retrans is being driven by that rebalancing, while the cost of our network affiliations is also imbalanced and the streaming, but the cost is almost exclusively the borne by broadcast.

So just as there's a rebalancing that's happening within pay TV, where broadcast audience well exceeds its share of the pay TV pie and our growth in gross retrans is being driven by that rebalancing, while the cost of our network affiliations is also imbalanced. And the streaming components of our streaming divisions of the networks need to be paying a lot more of the cost of the programming relative to the network divisions. And that rebalancing, I think, is going to be tremendously helpful in reducing the cost of our network relationships going forward.

And sorry, and to be clear on that point, I think you said earlier your network comp expense was down. I assume that was on an apples-to-apples basis, same-station basis was down in the quarter year-over-year.

I did not say specifically. We don't have -- we don't disclose network comp specifically. And what I was saying is generally the balance of what is paid for, for the content between the streaming divisions and the network divisions at the networks. the payment balance needs to be skewed much more towards streaming than the networks in terms of equitably sharing between those 2.

Okay. Very good. So in other words, over time, you think it will evolve that direction favorably to your cost base, I think what you're saying over time.

Yes. That's right.

Your next question is coming from Ben Soff from Deutsche Bank.

I had a couple. But first, I wanted to ask a follow-up. You made a comment that you might have some strategies to mitigate potential challenges in future transactions. I was hoping you could unpack that a little bit.

Well, look, I think Yes. I can't get into specifics in terms of how a transaction would play out and what specifically we would do. But just the setup alone, I think, would be different. Here, you had a #1 and #2 essentially coming together. You had a transaction that got closed almost immediately after the approvals. Certain optics wouldn't be the same just naturally. And I think being the first large transaction where a new market definition has been defined by the DOJ, but yet not having anything on paper about that, I think it's something that could be addressed more proactively.

Okay. Got it. And if there are divestitures from other deals, what's your appetite for buying station assets? Do you think you'd be allowed to create duopolies? And how should we think about potential synergies in those types of deals?

Sure. So we're very interested in double-ups. Anywhere we can add stations within a market, that's where we get the biggest efficiency gains. Also it really does improve the news product that we supply to the marketplace. It both expands the number of stories that we cover, differentiates the products being offered to the marketplace. So in the areas where we can have multiple affiliates in a market, those are the ones that are going to be most interesting to us where we can have an accretive transaction and also be deleveraging as well.

Got it. And my last question is just on ATSC. What are your latest thoughts there on the business opportunity? And can you remind us where we are on the path to commercializing it?

So we have been making good progress on ATSC 3.0 with the founding of EdgeBeam. It is up and running. The team is assembled. There is significant work being done up in Boston where they're based. They're having a lot of traction around digital signage. The eGPS product is up and running in several markets. And automotive is another area that we're very bullish on, but it will be longer term. And I would put streaming offload as well in that same bucket.

BPS, which is outside of EdgeBeam, but it's a sort of industry-wide effort led by the NAB has a lot of traction. There is a pilot going on right now in the energy sector, which we're expecting a readout from shortly, but we already know the answer. And that BPS is the only practical solution to a backup to GPS. A lot of the experts have already weighed in, including government agencies that if we want a credible backup that can be rolled out on a timely basis that is not space-based and not vulnerable to jamming and disruption from our enemies, it needs to be BPS. And so that's a very unique opportunity for the entire industry powered by 3.0 and contributes to -- vitally contributes to American safety and security.

So I'm more bullish than I've ever been on the opportunities around 3.0. Of course, it improves picture quality, consumer experience, interactivity, et cetera, and there'll be more content, better content put out to our audiences. But the real recemental revenue opportunities are going to be around data casting and other use cases. And that will be dramatically enhanced through the sunset of 1.0, which will unlock a lot more capacity to do these use cases and is in front of the FCC as we speak.

Your next question is coming from Dan Kurnos from StoneX.

Chris, I'm sure you're super excited to answer another M&A question, but I just want to be crystal clear. Obviously, some timing, we have to kind of see how Nexstar plays out. I mean do you think with that court case ongoing and sort of the concentration ramifications, market definition ramifications, and to your previous answer, do you believe that you could put up a transaction or someone you could find a willing participant in this environment at this time? And given your current stance on your preference to spin ventures in conjunction with M&A, does that mean that you're sort of willing to buy your time until you find the right transaction and this cleans up and you find the path forward? We're not saying it won't happen, but it may just take longer than we anticipate.

So Dan, I think it's fair to say that the Nexstar-Tegna transaction and what's going on at the state level is not ideal in terms of creating a good environment for M&A. It's certainly calls -- creates questions in people's minds, including your own or you wouldn't be asking the question. And so certainly, players within the industry are not immune to that. But I do think as they dig in and as we have, they will get more and more comfortable that this can be mitigated. And we have confidence that this deal should not hold up progress on M&A, and we think we'll be able to play through that.

As it relates to the venture separation, we are -- there's a lot of work that goes into a spin. And so we're doing that work now. We're working on the carve-out audits. We are proceeding on getting ready. So we're not just letting time sort of waste away here. But at the same time, as we've said pretty consistently, the ideal outcome is a separation web ventures alongside a broadcast combination. And so there isn't a rush to separate ventures. And we -- but we are going to make sure that we've got everything ready to go to do that.

Okay. That makes sense. And then as we think about tennis, you guys spend a good amount of time talking about it today and sort of the strength that it has. I know Chris, in the past, you've talked about like, hey, anything could be core, not core, you're having -- it's having -- it seems like it's having a moment. Are you guys leaning more into tennis? How are you thinking about it sort of as a long-term asset within the portfolio, especially in the consideration of if you were to do transformational M&A on the local side?

Yes, we are leaning into Tennis Channel. So that is -- you're very right in thinking that. About a year ago, we hired Jeff Blackburn, who is a legend in the streaming industry, who had an amazing career at Amazon, and he is doing wonderful things at Tennis Channel. And the ratings this last quarter, up about 20%, subs up over 30%. The product is getting better. The moment, as you pointed out, there's sort of a Tennis momentum and interest in Tennis is at an all-time high. It continues to grow. And so there's a lot to like about what's going on at Tennis. So we are investing in the product. We're upgrading the rights. We're upgrading the programming, and we're upgrading the direct-to-consumer experience. And a lot of that investment has been over the last year, and it really hasn't even come to light yet. But over the course of this year, you're going to see more and more upgrades to the product, to the experience. And so when we hired Jeff, that was a commitment to invest in Tennis Channel. And so I think it's going to be an amazing asset. It already is incredible. But as it translates its business more and more on to the streaming side where it already has all the rights it needs, it's going to be a really interesting asset.

We believe that -- over time that the asset right now, 20% of the audience is through digital. And the goal for Jeff and his team is to get to 50%. And so we're making that crossroads. And what helps those crossroads are -- we were asked the question a little over a year ago. What about with Rice's retirement, Fed's retirement. And now we have the next-generation rivalry with Ciner and Alkarez and even the offers is out short term. that rivalry isn't going anywhere. And now the Women this year, the rivalry has evolved between were Bakken and Sabalanca, which will cause even firm to tune in. And as you see in the 1,000s that took place out of India well the BNP Paribas, in Miami open that was followed in Monte Carlo with [indiscernible]. So when we increase this tech, next-generation and America has the next star in the horizon with the Ivan Vukovic, it bodes well for the sport and for the network.

Rob, can I stick with you for a second. Just talk a little more World Cup. Is there any way to kind of think about the incremental that we should expect from World Cup, number one. Number two, given how much Olympics sort of suck the oxygen out of the room in Q1, could we see that kind of event, especially in what is a particularly lackluster viewing time for television since we're in between seasons? And you also mentioned in your prepared remarks just around the digital acquisitions adding, you talked a little bit about getting prepared for a cross-sell with your digital assets, especially when you have this marquee event coming up. So maybe you could flesh out your thoughts there, just so we can get a little bit more sense on how you're going into this or game planning for it.

We're super bullish and we've had a large advertising quarry already in the early phase of the selling. And 48 are in Prime time. And as you indicated, it's normally a weaker viewing as we head into the summer months and with most of the gains on the final was happening here in the States, we're totally bullish. And what's great is we're set up across platform, as you indicated, that we have land in Donovan and [indiscernible] played the most men's caps. And at the end of June, we are launching a female soccer team with [indiscernible], which has got great because it also leads into the NFL season and Julie's married to [indiscernible].

So they have a very competitive household that will play out in audio as well as soccer and as the men's World Cup in a female perspective, and then that bodes well leading into 2027 in the Women's World Cup. So the way we've set this up to be able to take advantage with our stars on the audio side because you're going to see is card and Trace McGrady doing an activation at the NBA draft is we have natural tie-ins between our audio and our broadcast. And then the third element is activations at these events. So it is a 360 offer to our advertising clients, and that's why we're seeing this early inquiry from the advertisers.

And maybe I'll just add to that. So undoubtedly, there's a great synergy between what we're doing on audio and video, as Rob mentioned. But this is the -- we haven't had a World Cup in this time zone for quite some time. And obviously, being in -- partially in the U.S., this is a bigger World Cup than we have seen. So the comps that's certainly different. We are going to do way better than we did, say, 4 years ago. I don't think it will be as big as the Olympics, unfortunately. I wish it was. But I -- but in terms of total impact, but it's definitely going to be a nice incremental pickup for us.

Okay. And if I could just tie this all together, I guess, and maybe bring render into it, too. Just as I look at your year right now, you guys are pacing towards the high end of your prior revenue guide and towards the lower end of the imputed expense guide, especially based off of Q1. Now obviously, we have political and there's a lot of uncertainty out there. So I just want to be clear on what you guys are saying. It sounds like you guys are just being cautious given the macro. You're not necessarily seeing anything yet. But in all other circumstances, it feels like you guys would be potentially raising guidance at this point, but you just want to see how things play out given clearly the uncertainty out there, which I think is logical.

Yes, Dan, thanks for the question. Nice question to set me up here. But I think you captured the puts and takes there properly. Look, if I look at core, as I mentioned, there are headwinds that have picked up from what we anticipated when we issued the guide. And the visibility is a little bit less than what we had before. but nothing that changes our view that will be outside the range as we gave you.

On the distribution side, clearly pleased with all the things the traditional MVPDs are doing with their packaging. We are clearly seeing those results translate into our numbers now. So we are monitoring that trend going forward. But nothing there. A few months does not create a long-term trend. So obviously, you want to make sure that we see that consistently repeat itself before we say, okay, we have seen enough and now is the time to update our guidance.

And look, on the cost side of the equation, I mean, you know us very well. Expense management and expense control is built into our DNA. It's an ongoing process, and we continue to look at any and all efficiency measures. But we are also investing in the right assets. We talked about Tennis Channel. We are putting energy behind it. We think it's a great differentiated asset. And we are going to continue to do that where it makes sense for us. So if you take all of those things together, sitting here today too early in the year, same with political. There's no reason to say let's go ahead and change the ranges. Obviously, we'll continue to monitor it. And if there is a good reason to change that, we'll come back and tell you next quarter.

Your next question is coming from David Hamburger from Morgan Stanley.

I was wondering, could you just articulate why the separation of ventures is contingent upon a broadcast station transaction? And have you provided any guidance at all as to how ventures would be capitalized upon a spinoff or a separation?

So Ventures is not contingent. It's just our preference. And I think at some point in time, if we are unsuccessful getting a combination on broadcast, we would just move forward with the venture separation with the thinking that broadcast would then combine at some point on its own. But there is optionality that ventures gives us. And when we think about various combinations, it has a decent amount of cash. It obviously has some other assets as well, which could be more or less attractive to varying partners set we're in discussions with. And so that's really the main reason is that it's having that -- those various levers to ensure that a combination gets done, that maximizes the outcome for all shareholders.

And then in terms of the capitalization question, ventures does not have any debt currently. So the 4 walls of ventures is already very well defined. It's in our financials. There is no debt on any of the venture wholly owned subsidiaries, and it does sit on about $450 million of cash currently. So that is how it will be capitalized if you just split spin ventures today. That could obviously change a little bit if it's done in conjunction with the combination on broadcast.

And to clarify, you're saying a combination of broadcast or a combination ventures with another company?

No, I am saying -- I'm just saying tying back to what I said earlier in that some of the assets adventures may play a role in a broadcast combination that you could see the mix within ventures change depending on what happens on the broadcast side.

Okay. And how might that change? Kind of have you provided any sort of guidelines or guardrails around how that the complexion of that business might change? Or...

No. But I just went through, there's cash, there's other assets. There are -- in its simplest form, if more cash was needed in the combination, we could use some cash from ventures in order to complete as an example. But since there is no specific transaction to talk about our broadcast, I can't give you any guidelines.

Sure. And at what point would you potentially make that determination that you would just proceed with the spin in the absence of effectuating a broadcast deal?

Yes. We are not going to lay out a specific time line on that at this point. But as I mentioned, we are doing work to get the necessary items in place to do the spin like a card out , for instance. And so that will play into the ultimate timing.

I think -- go ahead, David.

I was just going to ask you a balance sheet question, but I don't know if you had a follow-up.

Yes. I was -- what I was going to say is, look, if you take a step back, and go back to the rationale for entertaining adventures separation. Ventures has -- and then you can do the math, close to $1 billion of assets that we don't feel are fully reflected in our valuation. And so how do we do that? We can provide enhanced disclosures for investors to take a look at it and determine how they want to value those assets. And if that's not happening, then we look at would these assets be fairly valued in the hands of other investors? And that was the thinking we had 2 separate ventures.

Now as that conversation continues, as Chris outlined, there's some optionality we want to preserve. So we are not under a specific time line to make that happen. We have started to work on ventures separation. And we are going to be very thoughtful about it. So we are pursuing broadcast transaction in parallel, and we don't know what the contours of those are going to be sitting here today and talking to you about this. So we want to preserve that optionality. And as that picture starts to come into focus, we'll provide you more color on what that separation time line and what the capitalization, et cetera, would look like. But it's too early for us to give you a firm read on that today.

Okay. And just one quick question around the balance sheet. Can you just talk about how you size the $165 billion $1 million of loan buyback? Why specifically that amount? Or was there any specific goal you were looking to achieve? And how could we think about that going forward, your appetite to do more of that?

Yes. I think, look, we had cash in STG and we looked at how to deploy that cash. And we have outlined that delevering STG balance sheet is a top priority for us. And this was a right time for us to go out and see if there would be any demand for us to take some of the debt investors out from our term loans. And we started the process with a certain number in mind that would be interesting for investors to participate in. And as we went through the process, we looked at how much cash we want to deploy at this point, and that's where we drew the line and executed that transaction.

Looking ahead, all options for us are on the table. Delevering is a top priority. As we generate more cash in a political year, you can expect us to continue to focus on that. No specific time line to give you here today when the next one is or the one after. But as those opportunities arise, we will obviously look at them and execute on those.

Your next question is coming from Shane McKenna from Barclays.

I know you guys don't have any distribution contracts up for renewal this year, but it seems like some of your peers have been going into blackout and it's becoming more common and then DTV filed the private lawsuit against Nexstar-Tegna. So I guess just curious your thoughts. I know you guys have some in 2027, but do you think this is a sign that renewals are becoming more and more contentious going forward?

Look, we don't think this is anything new. There are some Black Oaks currently going on there was last year, and there was the year before that and the year before that. So we've been very fortunate that we really haven't had any meaningful blackout for many years now. And we see no reason to necessarily change that. But the reality is the broadcasters comprise about 50% of the viewership on pay TV and only get about 1/3 of the pay TV pie. And the process of rightsizing that to what arguably should be greater than 50% since we represent the most premium programming on pay TV is not easy. And that adjustment, that shift of share away from cable channels that increasingly are becoming completely irrelevant towards broadcast is a difficult process.

And I don't see the activity that we're currently witnessing as really all that unusual from prior years. And I think the industry will manage through it as it always has.

Okay. Great. And then just -- I know you guys have done a good job managing costs and are always looking to cut costs. I was wondering if you guys have been using any kind of AI tools and helping managing costs? Or is there anything in the pipeline that you guys can do that can enhance cost reductions going forward?

So AI is a big focus for us, as I'm sure every company gets on calls and says. But for us, it is a true statement, and we've rolled out AI tools to our entire workforce. So we have both a bottoms-up organic strategy that we were bearing -- that's bearing fruit in terms of people in various areas coming up with ways to use AI tools to improve productivity. We also have a top-down strategy, a group dedicated to working on AI that is bringing new tools and workflows to the business.

And I think when you take -- when you consider just from a high level, the media business, beyond our newsrooms and our content creators and our orders. Almost everything else, you could see being facilitated or automated by AI because we don't deal in any sort of card goods or products. It's really just information and bits going back and forth and largely people in front of computer screens. Now the content creators, those are the differentiators, right? But over time, you're going to see a lot of the other roles within -- certainly at Sinclair, and I imagine a lot of other media companies will follow suit, and we see a lot of potential for that in terms of creating greater efficiencies, but also opening up capacity for new revenue streams as well.

Yes. If I could maybe add on to that a little bit. The application of AI is not just in cost reduction. I think it's fundamentally reimagining and reinventing how we do things structurally. I think that's the way to look at it for this to be sustainable, and that's how we are looking at it.

And as Chris also mentioned, there are significant applications of the technology on the revenue growth side of it also. So I wouldn't take a very holistic view on it. We have been working with the technology for several years now. We have rated on it, and we have some interesting opportunities in the pipeline that we are working with. So rest assured, like Chris mentioned at the start of his answer, this is not just a statement for us, it's actually true.

Yes. I'll just add it trying to payment picture of the revenue side is with our podcast just as one of our content creators, Tracy McGrady and Vince Carter, they have the big following in China and using AI tool sets to be able to cover their English language to Chinese and allow it to be distributed in China. There's just one opportunity that opens up what we're doing on a global basis, not just the United States basis. And that's what excites us about some of this technology. While we can put it in and we'll put it into the operations to make it more efficient, we're going to get greater velocity from the AI tool sets.

We've reached the allotted time for Q&A. I will now hand the conference back to Chris Ripley for closing remarks.

Thank you, operator. We want to thank everyone for joining us for our Q1 earnings call. To the extent you have any follow-up questions that weren't already answered, please don't hesitate to reach out to us.

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

Good afternoon, everyone. My name is Benjamin Soff. I'm the equity analyst at Deutsche Bank, covering TV broadcasters. I'm very pleased to be joined today by Narinder Sahai, Sinclair's CFO. Welcome. Thanks for being here.

Thanks, Ben. It's great to be here.

You reported 4Q earnings a couple of weeks ago. Looking back to 2025, what were some of the highlights for Sinclair? And what are your key priorities for 2026?

Sure. So in 2025, we delivered at or above the guidance ranges we provided for our business. We saw strong momentum in core advertising translating into Q1 as we look back. Distribution stabilized. Some of the traditional MVPD churn moderated. So that was essentially flat year-over-year. We started executing on our JSA/LMA buy-ins. We are about 70% of the way through there. We expect to finish that in the second quarter of this year with the full run rate synergy benefit realized in the back half of this year, which we have said is about $30 million annualized. And looking at the balance sheet, we ended the year with $866 million of cash, $1.5 billion of liquidity. And our nearest material maturity is not until the end of 2029.

So we feel really good about where we entered the year in 2025. And we're looking at 2026 as a catalyst year with a broadcast, sports as well as political heavy calendar, we want to use the incremental cash generation to delever.

So talking about 2026 priorities. The fundamentals of the business are strong. We want to continue to execute on the fundamentals of the business, which means continuing the momentum on core advertising, obviously expect, again, stable distribution trends, complete the JSA/LMA buy-ins, continue to advance the strategic review of the broadcast business as well as planning for the ventures separation. And then finally, as I mentioned, use the cash generation to delever the balance sheet.

So very focused on execution this year. The team has done a great job, a shout out to the team, and I have no doubt we'll continue to execute in '26.

That's a great summary. I wanted to start with the deregulation that could be happening in broadcast. We've had a number of developments recently. There was just a congressional hearing last month where that was discussed. The President voiced his support for a merger between 2 of your peers. And it sounds like regulators remain supportive. Can you provide for us an update on where we are in the process? And do you have a view on when we might see a potential rule change?

Yes. We are already seeing a meaningful improvement or support on the deregulation front. As you know, the Eighth Circuit vacated the top 4 rule prohibition around owning more than 1 station in the top 4 -- in the Big 4. I think there are several matters pending in front of the FCC. One is obviously around the national ownership cap. That is progressing. There's obviously proceeding on ATSC 3.0, which is also progressing. There are -- there's a quadrennial review around local ownership. FCC is looking into network affiliate relationships. There are a whole bunch of issues kind of making their way through the FCC.

We remain optimistic that things are progressing in the right direction. Specifically for us, I think it's important to recognize that the environment, both administration-wise versus regulation-wise has been very, very supportive. And the window of opportunity is now for the local broadcasters to work on consolidation and see if we can move needle there.

That's how we're looking at it but we are not underwriting our operational plan on one outcome or the other. We are actively engaged in the process but we obviously plan to execute under a variety of different scenarios, and that's what we are focused on.

Speaking of potential consolidation, you've been vocal about the opportunity for the broadcast industry, and you seem pretty interested in pursuing that opportunity. Can you share your vision for the future of the broadcast industry? And how do you think Sinclair fits into that vision?

Yes. So we do think with the current backdrop on deregulation we just discussed and the overall broad support and where we are with respect to an evolving media environment in the industry. I think overall, the industry structure in local broadcasting will evolve over a period of time. I think we have said before, I think we do envision in an end state where you have 2 large super groups in the local broadcast sectors. I think that logically would make sense to effectively compete with the big tech and big media. And I think like I've said before, now is as supportive an environment as any to continue to make material progress on that front.

On the consolidation side, like I said, we are doing everything in our power to continue to be part of conversations, right? Engage with all of the industry participants. A lot of questions get asked on, is there a certain structure we would like to see from a governance standpoint, from an economic standpoint. And I think I've answered it very simply that the transaction has to make sense on the economic side. It has to be financeable, and it has to clear the regulatory bar.

I think beyond that, we don't have any specific asks around governance or economics or any structure. And I think you saw that when we submitted an offer to acquire Tegna or combined with Tegna, I should say, excuse me, and then the offer we made for Scripps. So we remain very open-minded. We think that's the direction it needs to go. And while we are working on large-scale M&A and see how we can participate in that. We continue to stay focused on things we can control, essentially improving our portfolio. And you saw that us with working on the JSA/LMA transactions. We're obviously looking at end market and station swap transactions and continue to work to optimize our portfolio while large-scale M&A kind of remains to be seen.

Speaking of the JSAs, so as you mentioned before, U.S. Circuit Court last summer struck down the prohibition against forming in-market duopolies. And you have a number of transactions that you've executed and announced. Can you talk a bit more about the strategic rationale for these deals and the financial benefits you're expecting?

Yes. With that rule, as you mentioned, that got vacated, these JSA/LMAs are very practical, I would say, low-risk steps we can take to optimize our portfolio, create local scale and deliver on significant synergies. So I think it was a fairly straightforward from that standpoint. It allows us to move from a complex relationship with a partner into more of a control structure. I think we've highlighted a synergy benefit of about $30 million annualized, which are achieved in a very short order. And I think that was really the driving factor there for us. And I think those synergies come from obviously becoming more efficient on how we go about the programming side of things, the cost structures that you have in those markets as well as some benefit on the retrans side.

And I know you have 30 of those deals. When you look out across the landscape, could there be more? Or is this pretty much the opportunity set that you've already captured?

Yes. This is the opportunity set as we are going after it right now. I do want to be clear that it does not mean that all of our JSAs and LMAs are concluded at the end of it. We will still have some outstanding. But if you look at the option price or exercise and the benefit you will see out of it, we don't think the return is quite there for us to go after them at this point in time.

Okay. Makes sense. Switching to the core business. We've seen the pace of pay TV subscriber declines moderate over the past year or 2, and it seems like that's beginning to have a positive impact on the business. What do you think is driving this improvement in sub trends? And what are the implications for Sinclair?

Yes, good question. We are seeing subscriber churn moderate at some of our traditional MVPDs, as I referenced earlier. And I think part of that is just putting customers at the center of it and understanding the friction they have in today's environment. We think it has to do with how some of the streaming services are bundled into the pay TV packages. And I think customers are finding a lot of value in that. Also creating better customer segmentation around what they actually want to watch, whether it's sports or news or entertainment programming.

So I think the MVPD is kind of looking at that, trying to remove the friction in the customer experience. And I think it's starting to show. And if you are a customer today and you want to consume certain content, you almost need a cheat sheet to go figure out where that content is and how you go get it. So I think the MVPDs are working on addressing that, and I think that's starting to show.

You have a big round of distributor renewals that I believe is starting later this year but then really picks up in 2027. How are you thinking about the backdrop for renewal pricing? And in particular, what are the factors that allow you to capture price increases to offset subscriber churn?

Yes. From a distributor standpoint, we do have some renewals coming on later this year. Those are primarily on the virtual side. But our -- majority of our distributor renewals are actually next year, where I think about 65% of the subscriber base is going to renew. I think the conversation with the distributors is the same thing, right? So where is the value getting created? What content is made available through the affiliations that we have and what value it carries for the customers.

We do think, I think, at some point, continuing to push the price on the MVPDs, I think it's going to have certain limits. So I think from our standpoint, when we look at distribution, we look at both sides of the equation. We look at the gross distribution, which is obviously the dollars we receive. And then we look at the reverse side of it is all the fees we pay the networks.

So for us, what it comes down to is can we get to a stable and more sustainable net number, whichever way the economics are from a gross or a net or a reverse standpoint. We want to get to a very sustainable net number. And therefore, you have to take both of those into account.

Sure. And speaking of affiliate agreements, you have 3 major networks coming up for renewal later this year. You've said you're optimistic about being able to improve the economics of those agreements. So what are the key drivers that could lead to better outcomes? And what would that mean for net retrans over time?

Yes. So on the reverse side, I would say we have renewals coming up later on this year. We have one at the end of August, another in October and another at the end of December. So you'll see the full effect of that show up in our 2027 numbers. So as we think about negotiations with the networks, I think clearly, again, you look at where the value is being created, right? There's content that needs to be distributed and affiliates are a key part of distribution of that content.

How that content is getting made and delivered has also evolved over a period of time, right? Content is no longer exclusive. It is now available on the streaming platforms. So that's part of the conversation. And obviously, affiliations -- affiliates have a role in local promotion and advertising as well, right? So that's a key part of the equation as well.

So you look at the overall picture and you look at the content, whether it's premium sports or entertainment content, you look at the advertising side of it, you look at the audience and reach side of it and then you look at where the value is getting created in terms of content exclusivity. You factor all of that in, we think we have a very strong case to make with the networks when we are talking to them about the renewals. And like I said, for us, it's looking at both sides of the equation and making sure that we maintain the line there, so to speak, on a more sustainable net retrans number.

We seem to be in a pretty uncertain macro environment. On the other hand, your advertising business has some tailwinds this year from live sports and your digital assets. Can you talk about the trends you're seeing in core advertising and how those moving pieces could shake out for 2026?

Yes. On the core advertising front, look, in Q4, we saw a bounce back from Q2 and Q3. And part of that was helped by obviously your NFL and college football. But we are seeing that momentum kind of continue through into Q1 with Super Bowl and Winter Olympics. So very NBC kind of heavy. I would note that our affiliate network is -- NBC is the smallest of that, our affiliations. But we are obviously watching for the World Cup, the FIFA Soccer World Cup later on this year in June and July, which is on FOX. I think 70 or so games are on linear TV. It's a more expanded tournament. So that provides a nice offset.

I think, look, when we look at the core advertising categories, we saw a broad-based trend in those categories. And I think those categories always helped by marquee sports programming. So if there is good content, good audience, good reach, you see those categories come back. And so I think that's what we are seeing, and that's what we expect to continue to see at least in Q1, and we remain very optimistic on what we are going to see later part of Q2 and into Q3.

We have an election later this year, and you've said you expect record results for a midterm. Why is broadcast such a powerful platform for political advertising? And can you share what you're seeing that gives you confidence in this upcoming cycle?

Yes. Political advertising is interesting. I think for political advertising, you want to reach voters that actually do vote. They are engaged in their communities. They are potentially undecided on key issues. So there, I think local news, local community engagement matters a lot. And I believe broadcasters through that broad reach and local news and community engagement delivers unlike any other platform. So I think that works really well.

And if you look at Sinclair's overall portfolio, I would tell you, roughly speaking, you've got 1/3 Republicans, 1/3 Democrats and I would say 1/3 Independents, and there are undecided voters across. So if there is a party, a candidate who wants to reach these voters in a very balanced manner, I think there is -- broadcast has just an unbelievable advantage there. Now we are seeing connected TV and digital platforms picking up. So if you look at ad impact for 2026, they are forecasting $10.9 billion of spend in political advertising and roughly 49% of that is going to be on broadcast, which is a fairly significant number.

But I do want to point out that for digital and connected TV, those are not lost dollars. We do have a solution in connected TV through our digital remedy business as well as through our O&O sites and audios and podcast. We do address the digital side of the advertising as well. So for us, it's a net positive.

And if you look at overall where some of these competitive races are, where a lot of political ad dollars are, I think our footprint overlays nicely with that. So we expect a record 2026 political year. Our guide for 2026 is to be at least comparable to 2022, which is about $333 million. It's too early in the year for us to come off of that or give you a different number. So we are watching it closely, and then we'll continue to refine that as we go forward.

Makes sense. I wanted to ask about the balance sheet. You've taken a number of steps recently to strengthen your balance sheet. Can you reflect on the progress you've made to date and discuss how you're thinking about managing it in 2026?

Yes. So I think if I take myself back to the start of 2025 with the comprehensive refinancing and then beyond that, so that was a very significant event to create the runway for the company. And then we have taken care of the near-term maturities. So we repurchased our 2027 notes. We have executed on a $375 million 3-year AR facility, which provides us additional liquidity. And our nearest maturity is not until the end of December -- until the end of 2029 and December 2029, as I mentioned earlier. So that gives us a fairly significant runway to execute on our operational plan. It goes back to the priorities I outlined for you is to continue to focus on the fundamentals of the business, continue to execute on core advertising, monetize on a sports and political heavy broadcast calendar and then utilize the incremental cash generation to strengthen our balance sheet to delever. And that's our #1 capital allocation priority.

You launched a strategic review last year, as you mentioned, to take a new look at some of the assets in your portfolio. Can you provide an update on that process and discuss how these initiatives are creating value for shareholders?

Yes. I would say the strategic review is ongoing and progressing well. I think on the broadcast side, that clearly means a large-scale M&A transaction for the broadcast business, which we are very, very heavily focused on. On the broadcast side, that also means we continue to do the station portfolio optimization. We have taken very concrete steps to move the ball forward there. As a part of this strategic review, we announced our intent to separate our Ventures business. We've kicked off the planning process on that. So that's progressing well. As you know, all of that takes time in preparation of the carve-out financials, getting them audited, perhaps getting an advanced opinion from the IRS and so on and so forth. That's easily a 9-month process. So we are firmly down that track.

So everything is kind of moving as planned. Obviously, on the broadcast side, you need a willing party to announce a broadcast transaction, and we are diligently kind of working towards that and looking at all of our options there. So I would say, overall, happy with where we are. Obviously, the large-scale M&A and a deal there is something that we have not announced that, and we're working towards that.

During the fourth quarter call, Ventures initiated a process to monetize some additional noncore holdings. Can you give us some more detail on what that is?

Sure. So if you look at the Ventures portfolio today, it's made up of a significant amount of minority investments, which are investments in private equity funds in real estate, indirect venture funds, and we have some other minority investments. So overall, as of the end of the year, the book value of those investments, including our stake in Bally's is about close to $900 million. So fairly significant. So our thought process there is that we want to monetize in a very thoughtful manner those minority investments, generate cash from those monetizations and then deploy that cash towards more controlled majority-owned investments, where we have control, where we have visibility into future earnings and cash flows, where we have recurring revenue streams.

And we have hired a team there. We hired a principal on Sinclair Ventures to start to execute that. We're building that team, and we are firmly down that track to invest in more majority investments and liquidate our minority investments portfolio.

Now thing to keep in mind is all of this kind of takes time. You are sort of dependent upon the market when you can monetize. So this isn't monetized at all cost. We are going to be very thoughtful about it but we are going to grab those opportunities with both hands where they present themselves.

It sounds like the NFL negotiating window could be opening up later this year. And given how important this programming is to the broadcast ecosystem, I wanted to ask if you had any thoughts or predictions on how that might shake out?

No predictions. I can tell you how I think about it. And then obviously, different folks have a different way of thinking about it. So whenever I think about NFL, I'm thinking about a very passionate and engaged fan base, right? That forms the basis for the value of these franchises and all of the rights that the NFL wants to show these games.

The second part of this is when I think about NFL, I think about the international games and expanding NFL beyond the United States or the continental United States. I would say international is a big, big part of that equation. So I think about that. And I think about am I monetizing all of that? And am I getting fair market value for the rights.

And then the flip side of this equation is, I would also say that NFL is also very good at thinking about the different partners, whether they are streaming partners or whether they are broadcast partners and creating different packages and showing the games in such a way that meets those objectives that I mentioned. So opening up of those negotiations, I think, can provide a lot of certainty to the networks as they get concluded successfully. I think given the broad reach and the audiences, I think networks are going to be -- continue to be a big part of that.

Given the growth in streaming, I think streamers are going to be a key part of that. So what that means for local broadcasters like Sinclair is looking at how some of those things, some of the economics kind of flow through the network affiliate equation, right? How does that kind of flow through there? And I've mentioned this multiple times before. For us, I think it's going to boil down to make sure we have a sustainable model there.

And the other side, when you look at it is also the -- I recently saw that FCC opened an inquiry, a media bureau inquiry into sports right marketplace. How is that affecting consumers and fragmentation. Their estimates show that if someone wanted to watch all NFL games, they have to spend $1,500 doing it. That was quite interesting to know. And look, I did not grow up watching NFL, to be honest with you. But when I think about watching a game, I almost need a cheat sheet, like where is this game what time is it? And do I have it? How do I go watch it? And that is real friction. And if I'm a consumer, I'm thinking about that friction and how do we get rid of that friction. And I think that's important.

So I think all of those are a key part of this equation. But I think in the end, if you go -- take it back to the basics, I think you have to take care of the fans and fans need less friction, not more.

Makes sense. ATSC 3.0 represents one of the more exciting levers for longer-term growth for your business. Can you talk about the progress you've made there to date and how you think about the path towards commercializing that opportunity?

Yes. So ATSC 3.0 is, I think, a significant element for broadcast television. It's a more efficient standard to transmit. It allows for better use of the asset, which is the spectrum through the compression technologies, the IP-based protocol. And so if you think about that, think about that limited asset, the best thing we can do to increase the value of that asset is to find a way to do more with that asset. And the way to do more with that asset is to go to a standard like ATSC 3.0 that allows us to do so. And I think with that thought process, I think Sinclair and 3 other broadcasters came together to form EdgeBeam Wireless. We hired a world-class CEO in Conrad Clemson to help us kind of think through all of that and help us monetize it. Conrad is building a world-class team.

Sinclair has done tremendous, tremendous amount of work on the technology side. I can tell you from my personal experience as I was thinking about taking this job about 8 months ago, I actually visited our ATSC 3.0 operations and lab in Hunt Valley. And a lot of the things that folks talk about how broadcast and broadband work together, how data is delivered, how it's measured, how the audience view is measured, I've seen that firsthand. It is not a pie in the sky. It is something that works. Now you have to scale it. And when you scale it, you're going to run into some of the things to technical challenges to solve there.

And I think at the same time, I think FCC has been fairly supportive. I know the industry is pushing towards a date certain to sunset 1.0 and go to 3.0. That obviously, FCC did not put that in their latest proceeding, but that's what -- where we are pushing. And I think the overall ecosystem from device manufacturers to others, it all has to come together for it to become a reality. And I would tell you, there is real, real benefit win-win here for everybody kind of working towards that.

There are some customers in ATSC 3.0. I think we got our first paying customer, I think, in late 2025, very small numbers, nothing substantial to talk about. But I would say things are moving in the right direction. And I would -- I'm watching it, cheering for it, helping support in any way I can because I think it is a significant opportunity here.

I wanted to follow up on the sunsetting process. How important is it for the industry to sunset the older standards before you switch to ATSC 3.0? And where are we in that process today?

Yes. I think sunsetting is just going to accelerate the adoption. I think what FCC has said today is broadcasters can voluntarily transmit in 3.0, but then you have to also simulcast in 1.0. In the current proceeding that FCC has, they are looking at whether they should take away the simulcasting requirement. do you stick with the 95% coverage requirement? And so all of those are steps in the right direction. But if you look at the consumer electronics manufacturers, the TV sets, we don't want to burden the end consumer with now having to go out there and purchase a new TV set because there's a new standard.

So I think that's very, very important that we want the entire industry and the ecosystem to come together. And I think the way that happens is through providing some certainty on the sunset. So I think sunset is very, very important. Now can the broadcasters do things on their own to accelerate the adoption, providing the tuners, I think we are looking at all of those options.

And maybe to wrap up, AI is obviously a big topic these days across the entire market. It's still relatively early but do you have any thoughts on how you might implement AI across your business?

What is AI?

That's a good question.

Just kidding -- just kidding. No, AI is a technology that can significantly transform how we do things. We obviously are utilizing AI today in our workflows in gaining more efficiency in how we do things. But I think deploying AI at scale requires some additional work. And we are working on those things, specifically as they relate to our news gathering operations, preparation of that content and for that content to be available in various different platforms. I think AI can have some pretty interesting things there for us that we are experimenting with. I think it's fairly obvious that AI can be used to better price your ad inventory, look at your traffic systems, all of those things we are working on.

But I would tell you this, whenever -- and this was early part of the conversation when I had just joined the company, I was very clear, and I think Chris was very clear, the leadership team was very clear that we are not doing AI for the sake of checking the box and doing AI for the sake of doing AI. It has to bring some real tangible benefits to the business. So we are focused -- very, very focused on high ROI cases and how we can harness the power of this technology for the betterment of the business, for our customers as well as the viewers.

That seems like a pretty good place to wrap it up. Thanks, Narinder.

Thank you, Ben. I enjoyed it.

Good afternoon, everyone. My name is Avi Steiner, and I am the media analyst here at JPMorgan.

It's our pleasure to have with us back at the conference once again Sinclair Broadcast Group. And with us from Sinclair today is the Chief Financial Officer, Narinder Sahai.

Narinder, thank you for joining us at the conference this year.

Avi, it's great to be here.

Okay. We're going to start, as we always do with these fireside chats, with questions from my end. And then towards the very end, we will open it up to the audience. There's a lot to cover here.

So let's start if we can, Narinder, maybe with the company's outlook for core advertising spend in 2026. Remind us what you said on the recent call, but really would love to know what's behind the outlook.

Yes, sure. So on core advertising for total company, we are guiding at the midpoint plus 1% versus the prior year. There are several puts and takes here, if you will. I think obviously, we feel confident with the sports-heavy broadcast calendar. Just concluded the Olympics, the Super Bowl, and then you're going to have the World Cup on FOX later on this year.

What also gives us confidence is our digital footprint, that is a bright spot for us. And in addition to that, our audio podcast work is starting to show traction. So that's part of the guide as well. We are factoring in a normal crowd out, Avi, for political. It can feel we're guiding up in a political year, but all of these things kind of give us confidence.

And then I want to give a shout-out to the team listening. They have executed really well and I have full confidence that they will continue to execute.

Okay. Great. You touched on crowd out, and I think it's a nice natural segue to political. I don't think I need to tell anyone in this room that our electorate and politics seem as fractured as ever, but that seems like a good setup for political this year. I believe your guidance was at least as much as 2022, you'll correct me if I'm wrong. So just want to get a refresh on that, and maybe discuss the competition for political ad dialers that the company and the industry might be seeing, whether that's from digital channels, like cell phones, or whether that's CTV platforms, what have you. Would love to hear your outlook.

Yes, sure. So let me take it in the order. So first, refresh the guide. We provided preliminary guidance of at least $333 million back in November, which is the number comparable to the last midterm cycle in 2022. We reiterated that position just when we announced our full year results last week.

I think it's too early in the year for us to move off of that, although if you look at some of the reputable trackers, the political ad spend is expected to be up 20% versus the prior midterms cycle. And if you look at the share of broadcast in that, it's expected to be roughly half of that spend.

I also want to point out that while CTV is growing, we do play in that space, so through our Digital Remedy business, which is a marketing ad-tech platform, we do have assets to address the CTV side of the equation as well. So I don't want folks to think some of those, due to mix shifts, some of those political ad dollars are lost. It actually represents incremental opportunity for us.

So if you look at overall 2026, we expect it to be a record political year. Obviously, we are present where some of the key races are, starting with Michigan, Maine, Ohio, Nevada, Texas. And if you look at the projections in these states, roughly $3.1 billion of the $10.8 billion or $10.9 billion of spend is going to be in these states.

So we feel really confident. We feel good about where we are and how we are guiding. And as we kind of progress through the year and see how some of these races are shaping up, we'll come back with an update. But feel good about where we are today.

Excellent. I definitely was not fishing for new guidance, but I appreciate it, Narinder. Beyond political, I want to go back to something you touched on in the earlier question, and that's just the number of marquee sports events that we have this year. The Olympics just completed, as you said, we have the World Cup coming in a number of U.S. locations, which I think is probably more important than ever. How additive, can you maybe frame it for us, to revenue that those events might be for the company this year?

Yes. So like I mentioned at the start of our conversation, is sports-heavy broadcast calendar kind of gives us confidence in the plus 1% guide in core advertising. Obviously, the Olympics just concluded and we have the World Cup coming up, so those are key.

I think the key point here to understand is when you have live marquee sports event, the reach of the broadcast is just unparalleled in terms of delivery, in terms of audience and fans and how far and wide it reaches. So I think that continues to be a key proposition.

And then if you look at how we are continuing to engage the audiences through our cross-platform initiatives, whether these are podcasts or activations leading up to the events, such as Super Bowl that we did in San Francisco this year, all of that gives us confidence that the core guide can be up this year.

Terrific. And I'm going to shift to another part of the income statement and then maybe go to the expense side. But can you remind us what percentage of the company's subscribers are up for renewal this year? And what are your net retrans expectations for '26?

Yes. So let me address the subscriber side first. So we don't have very meaningful subscriber base renewing this year. We have some virtuals renewing later on this year. But we do have meaningful subscriber renewals coming up next year. I think it's roughly 60% to 65% of our subscriber base is renewing next year.

What's meaningful this year that we're keeping an eye on is our network affiliate renewals. We have some coming up in August, some in November and some later part of this year, in December. I think those obviously will affect the reverse side of the equation, and therefore, the net retrans economics.

We are not factoring in a significant move one way or another in our guide that we have provided, which we don't talk about the net retrans, but we talk about gross retrans. And we have assumed stable subscriber churn consistent with what we have seen in that guide, Avi.

Terrific. And then if I can stick on the reverse piece of it for a minute, I'm curious if you can maybe delve into a little more of what you're seeing. And I ask because sports rights are continuing to rise. And I'm curious if the affiliates at some point might be expected to shoulder some of that increased cost.

Yes, it's a good question. So as far as the value of some of the sports rights continues to go up, because there are audiences for those events, right? So it's just the economics. When we think about some of these sports rights, specifically the NFL, we do think that affiliates have a very key part to play; broadcast has a very key part to play in that distribution. And I think some of that factors into our conversations with the networks as well.

If you think about it from a commercial standpoint, I think you have to look at where and how the value is delivered. Affiliates bring broad distribution to the networks. Networks obviously have their costs for content and sports programming. And you have to kind of see where some of those intersect and how you think about the economics there. And I think that factors into those conversations.

The second part of this is also the exclusivity of the content. Content, if you go back several years, maybe decades, the content used to be very exclusive. With the advent of the streaming platforms that these networks have, that content is not exclusive anymore. That commercial aspect is a part of this.

And then I think there's overall, I think, regulatory support in making sure that the affiliates are healthy, they can compete effectively and fulfill their public interest mandate, as well as deliver their local news, local engagement, local journalism that only broadcasters can do. So all of that, Avi, kind of factors into those conversations.

Okay. And maybe this dovetails into our first sort of big question here, tying the sports front, tying into costs and everything else. But the NFL is about to reopen its rights agreement with its existing broadcast partners 3 years early. I'm curious how you think those negotiations play out. And is there a risk that one of the broadcast networks potentially loses their NFL package?

Yes. So this is how I would think about it. So I think from an NFL standpoint, they absolutely want to make sure that they have engaged and a broad fan base. I think that's number one. I think that's really where the value of these franchises come from, is because of the very passionate fan base. So I think absolutely need to protect that.

I think number two is broadening the reach of the game, perhaps internationally. I think that's kind of number two. And I think number three would be to make sure that the value of those rights are monetized at market values.

So if you keep some of these things in mind, I think NFL has been really good about introducing different partners and different packages to do so. So I think I would see this conversation around reopening or opening the negotiations kind of part of that strategy to continue to make sure that the value of the rights is maximized.

I think it remains to be seen how that progresses. I think if you look at some of the broadcasters in the Sunday afternoon space, perhaps those conversations are had with that group first. And if there are more rights to be paid, I think the support for all of that is going to be the continuing increase in the audience levels, right? That has to be supportive here. And that increases the value of the ad inventory, et cetera.

So when you put all of that together, then you get into the conversations around how some of these perhaps increased fees, rights fees, are divided up across the entire ecosystem. So I think you think about the fees from the MVPDs to the affiliates and then the reverse fees to the networks as a part of that equation.

And then I started with the fans. So if you keep the fans at the center of this, the FCC's Media Bureau recently opened a docket inquiry into the sports rights marketplace. I think the FCC is asking the right questions. Given the fragmentation here, I think their estimates are it takes about more than $1,500 for an NFL fan to actually get all the games. And then they're also looking at how some of these increased rights fees that affiliates and the local broadcasters may need to shoulder, how does that impact the economics and their ability to fulfill their public interest mandate? So I think you have that on the other end.

So I think all of these things kind of have to come together in these conversations and see to find the best solution for the fans, for the networks, for the affiliates as well as the right owners.

That was super comprehensive. You touched on the FCC, which is where I'm going next. And I'd love to get your thoughts on how they might proceed with deregulation. Do you expect the commission to remove the national ownership cap entirely by issuing a new rule? Do you think they do it via the Media Bureau and take action on a deal-by-deal basis, which may or may not be ideal, depending on your perspective, or will the FCC look to approve consolidation by waiver without a vote at all and perhaps mudding the waters a little bit more? Would love your thoughts.

Yes. It's very hard for me to kind of handicap which way the FCC is going to go. But I think we should look at the facts. I think the facts here are that FCC is supportive of revisiting some of these rules, whether it's a national ownership cap, whether it's local ownership rules. And I would even expand to say how some of the new next-gen broadcast standards, like ATSC 3.0, gets commercialized on a larger scale. And whether it's network affiliate relationships.

I think the FCC overall is asking the right questions, they're probing on the right things here. And look, they have all of these levers at their disposal to facilitate consolidation in the broadcast sector, whether it's waivers or lifting or eliminating the caps or any other tools at their disposal.

I would say that the FCC is very supportive. I think the window of opportunity is now for local broadcasters to capitalize on that opportunity and look at consolidation in a very serious manner. And we've been vocal advocates of that.

We definitely want to come back to those words, window of opportunity. But before we go there, you touched on the FCC -- I'm basically asking you to be a lawyer, so I recognize it's unfair of me. But most of the press has been focused on the FCC, but I'm curious what the company might be hearing from the DOJ, the Department of Justice. Any thoughts on how they might view end market concentration on the one hand? And does Gail Slater's departure even matter?

Yes. From a DOJ standpoint, I think they obviously will look at the end markets, the market power and competition and pricing. I think those are the questions, obviously, they need to answer. And in all of those, I think the market definition becomes important.

I think we have said long ago, and we've reiterated it recently and we continue to be of the belief, and I think other local broadcasters are in the same bucket, that we are not competing with the other local broadcasters alone. The field has shifted. You've got big media players, you've got big tech players here. And those all have to be taken into consideration when looking at these transactions. So we feel that falls in DOJ's buckets, and I think they will -- they have their work cut out for themselves. And I think we'll see with the -- how they proceed with the large transactions that's out there that the President has publicly supported.

Okay. I'm going to go back to your words, window of opportunity, and maybe ask a couple of questions around that. And I'm sure you can't speak for Scripps, let's start off by saying that. But it seemed to us that Sinclair had enough in the offer to at least create a basis of conversation to get to a deal. What can you share about what happened with the transaction discussions? And is it possible that, at some point in the future, this all gets revisited?

Yes. I would answer that a little bit more broadly. I think I mentioned to you that the window of opportunity is now. Looking at that window of opportunity, we're looking at all options for large-scale M&A with all -- any and all potential partners, as well as things which we can better control, for example, the JSAs and the LMA transactions we have done recently.

Specifically on Scripps, I think we feel the industrial logic, the financial logic of a deal is very, very compelling. We've put our best foot forward. The offer is public. Obviously, I would say it's for Scripps and the management team and the Board there to decide how they want to proceed. Nothing incremental to add there, Avi, from -- other than what's already out in the public.

Okay. Fair enough. And since you just touched on it, I'd love to get a quick refresher. You had some of your buy-ins on the JSA and LMAs approved, I believe. If you can just remind us, if you have it handy, how many have been approved, how much are left to approve and what the expected EBITDA contribution from those stations to be?

Yes. Good question. So on the JSAs and LMAs, we started with various different categories where we fit these JSAs and LMAs into what is actually required. And I would say roughly 30, 30-plus transactions. And I would say we are 70% of the way working through those. And some of these, obviously, are as simple as getting it approved, and we assume, at day 1. Others, we have transferred the affiliation to our station and there's a step 2 in terms of closing on the licensed assets. So I would say we are 70% of the way there.

We have estimated $30 million of EBITDA lift or contribution on a run rate basis from completing all of the scoped JSA/LMA transactions. I would say in 2026, we expect to complete the remainder of our work, by the second quarter of this year. And so we would expect that when we exit 2026, that you will be at the $30 million exit run rate. So $30 million will not be fully in the numbers for 2026 just because of the timing of these transactions, working through the year and what it takes for us to realize the benefits that I just talked about. So I would say that's how you should think about it.

Terrific. And we are at a leveraged finance conference, so I'm going to throw a couple of debt, balance sheet questions your way. And I'd like to start, if we can, Narinder, on refreshing us -- refreshing the audience on the company's leverage target. How does it get -- how does the company get there? And M&A of structured with equity is certainly going to be helpful, but is M&A needed to achieve your leverage goal?

Great question. So I'm going to start at the end of your question. I would say that our plan to delever, strengthen our balance sheet and do what we need to do is not dependent on just M&A alone. We are very, very heavily focused on things we can do, things we control, controlling the controllables. I've said that from day 1.

We have a very, very strong core business. We have very stable distribution trends. We are very, very focused on making sure we're effective and efficient on our cost structure and we continue to generate cash, especially in the political cycles like 2026, and use that cash to delever. And continue that work through '27, continue that work in another marquee political year in 2028, which is expected to be even bigger than 2026.

So I think there are things which are in our control, Avi, things we can do, things we're executing on. And you saw us do that with the Q4 print. You saw us set a very robust, I would say, guide for this year. And we are fully aligned in using all of the incremental cash flow we generate to continue to strengthen the balance sheet and delever. That's what we are focused on.

I am not evading your question when I say I have not set a definite leverage target yet, so more to come on that. But this is how I would the pieces.

Okay. I will take the stay tuned for a leverage target. That's perfect. You touched on something else that I'm interested in, which is obviously the healthy free cash flow. We're in an even year, as you mentioned, so you're going to have a lot of cash coming in, primarily in the second half, and that's going to be very helpful to the company.

And you've talked about deleveraging. But at the same time, from where I sit, I see no near-term maturities. I see bonds and bank loans trading at a discount, but I see no near-term maturities. So how should investors think about where you might apply that free cash flow going forward? Or is it just a build? I don't want to give you too much credit. Go ahead.

Yes. Cash, obviously, can build. But I think I've said this before, that we got to deploy that cash to actually look at gross debt reduction. And we have several levers available to us to do that, and we are continuing to think through all of those options there, Avi, from open market purchases to other interesting options, for example, a Dutch auction or maybe a negotiated purchases of debt from our nearest maturity holders. So all of those things are on the table.

But rest assured, we want to make sure we are getting good return on the investment, we are building our credibility with our debt investors. I think the deal in February went a long way in doing that. And I fully intend to continue on that path and continue to show free cash generation ability of the business and continue to delever as we go.

So all those options are on the table. More to come, like I said, on the leverage target and how we intend to execute on those. But rest assured, it's a top priority for me, it's a top priority for the management team and the Board.

I think the audience, but I'll speak for myself, I think hearing it is top priority is good news, frankly.

Sinclair Ventures, and I told the audience I would open it up for Q&A in a few, but if I can touch on a couple more questions. Can you update us on Sinclair Ventures? When the company announced the strategic review, I think the plan included evaluating a possible spin or split or other transaction for Ventures. Where does that stand? And is it possible, I think you got this question on your most recent conference call, but is it possible that cash from Ventures, which is healthy, could play a role in any future broadcast M&A?

Yes. So let me first maybe recap what Sinclair Ventures is, for the benefit of those listening. Sinclair Ventures includes a variety of investments, from minority investments to direct investments, private equity, real estate, as well as consolidated investments like the Tennis Channel, the ad-tech platform, Digital Remedy, antenna business, Dielectric, our stake in Bally's. And there is -- if I leave the consolidated investments on the side for a minute, there's $880 million of net book value, not even market value, net book value of these assets in Ventures.

So when I look at Ventures and I look at broadcast and I look at where we trade, clearly, the Ventures assets, or you can say the total company, is not being fully valued, right?

So part of the strategic review is how do we monetize and how do we land clarity, bring clarity to the Ventures asset? And that's where we started on this journey to separate Ventures. That work has already started, and work actually started late last year. And that's preparation of carve-out financials, getting them audited, getting any advanced opinions from the IRS, running it through the SEC process. That takes a good 9 months or so. So we are firmly down that path.

Having said that, I would also say that the ideal sequence of events here for us, Avi, is going to be a spin merge, right? So we have a broadcast transaction on the tape and we do a separation of the Ventures concurrently with that. But I think it remains to be seen. Some things here clearly not in our control, although we are working very hard on the broadcast M&A side.

And then just to answer your question around availability of the Ventures cash, we have said that it's $465 million of cash as of the end of the year in Ventures and we have the optionality or the flexibility to deploy that cash to facilitate a transformative broadcast transaction. So that thought process is still there.

Terrific. I'm going to ask one more before opening it up to the audience. You had touched on ATSC 3.0. It's been a little bit quiet. Perhaps I've sat in on so many different presentations over my career, and it seems like we're getting closer. But with that, can you update us on the latest? And my question, which I've asked before, is how far are we from seeing meaningful revenue from ATSC 3.0?

We are definitely closer.

Okay.

Is what I would say. Look, I think there is very -- a renewed focus there with our broadcast partners. We hired a world-class CEO in Conrad Clemson to run EdgeBeam for us. EdgeBeam is the joint venture between us, Scripps, Gray and Nexstar to monetize ATSC 3.0. Conrad is busy working putting a plan together, building his team and how do we move that forward.

I would say that there is revenue currently being recorded in ATSC 3.0 in EdgeBeam, although it's not very meaningful at the moment. And I expect as Conrad kind of builds that team and as we see more movement on the ATSC 3.0 front, on the FCC, they have obviously -- are proceeding here, looking at that very closely, I expect all of that to accelerate and generate some meaningful revenue and cash flow for not too distant future, I would say, a few years. Not sure I can say what those few years are. I would say, if Conrad was sitting next to me, I would tell him less than 3. But we'll see how all that goes.

I'm going to hold you to that. Audience, if anyone has a question, now is your time. All I ask is that you speak into the mic. And if not, I've got 2 more ending questions for Narinder.

Any questions from the audience? There's one right there. One second. Thank you.

Can you speak about the AI initiatives? Are you guys thinking about that, how you're applying? Are you playing in the front side of the business or more in the back office kind of things?

Yes. Thank you for the question. On AI, I think there's lots made of AI and there's I think a lot more noise there than facts. I would say, from a Sinclair perspective, we are taking a very measured approach on AI. I would say that I think the benefits of AI are visible when you look at it purely as an efficiency tool, a productivity tool in our day-to-day work. I think we are definitely seeing that.

But I think beyond that, where we think AI can be really beneficial is in some of our news gathering operations and how we format some of that content for availability, what's resonating with the audiences, some of the recommendation engine that AI might have. We've started on that journey. I wouldn't say we are leading in that front or towards the end on that, but that's a very, very key part of the AI conversation within Sinclair.

And also, one of the other areas where we are looking at AI very closely is in all of our sales and go-to-market motion. Significant benefits there in terms of better understanding our audiences, better understanding what's working, what's not working, what's the value of a salesperson, and so on and so forth. And I think those would be some of the things I would point to. And you will see some of those initiatives start to accelerate over the coming few years.

So nothing I would say to you is baked into our guide or something that is going to meaningfully change things in 2026. We are experimenting with it. We are making sure we are generating return on those investments, and we are being very considerate and thoughtful around it.

Excellent. Okay, I said I have 2 more questions and I'm going to squeeze them in here. And I'm going to ask you, I've asked you to put on your regulatory hat and your CFO hat, and now we're going to ask you to take out your crystal ball. What do you think the local broadcast sector looks like 3 years from now? Are we looking at 2 to 4 super groups? Or will the wheels of consolidation perhaps turn more slowly, particularly if we get an, I don't want to say adverse, but a different outcome in the midterms than perhaps from the party in power today?

Yes. I was -- I wish Chris was here to answer this question. I've never heard anyone answer that question better than Chris. And I would just say that we are looking at an end state in the sector where you have maybe 2 large super groups. Are there maybe 2 large super groups and maybe a few smaller players perhaps? But I would say that's kind of the end state we are driving towards.

I think that's needed for us to compete effectively with big tech and big media. And I have referenced the window of opportunity that's available now and I'm thinking about that window of opportunity day in and day out. And I'm hoping that some of that urgency is shared elsewhere in the sector. But that's -- I'm still going to hold to that.

Excellent. It sounds like you're definitely going to be a part of it. My very last question as we end here, and it's a bonus looking-into-the-future question, do you think the big 4 networks will own their local TV stations 3 years from now?

Very, very hard for me to say. I think the networks would definitely look at it from an economic standpoint. What does it take to -- what are the economics of owning a station or a market or not owning it? There's obviously the retrans and the distribution economics tied to it, but then also the economics tied to running and operating these stations. So I think that's the hat they would put on. I think there's probably some headroom for the networks to own stations within the current caps. Hard for me to specifically say.

And I think it's going to vary from network to network as well. Some networks might be in the camp and the others may not be.

Excellent. Narinder, thank you for the time. Thank you, Sinclair.

Thank you, Avi.

Good day, everyone, and welcome to the Sinclair Fourth Quarter and Full Year 2025 Earnings Call. 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.

Thank you. Good afternoon, everyone, and thank you for joining Sinclair's Fourth Quarter 2025 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 COO 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 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 fourth 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. These measures are not formulated in accordance with GAAP, are 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 morning, everyone. Let me begin on Slide 3 with a look at what we accomplished in 2025. This was a year defined by disciplined execution meaningful, simplification of the portfolio and a deliberate positioning of the company for stronger performance in 2026 and beyond. First, we delivered strong financial results. .

For the year, total revenue was $3.2 billion, and adjusted EBITDA was $483 million, both above the midpoint of our guidance. In the fourth quarter, we generated a total revenue of $836 million and adjusted EBITDA of $168 million. Importantly, we saw encouraging trends in our core advertising business. Core advertising grew [ 15% ] year-over-year in the fourth quarter, and we're beginning to see early signs of churn stabilization across key MVPD partners.

That progress reflects both improving operational execution and the durability of our local content portfolio within Ventures, the portfolio generated $104 million of cash distributions during the year, and we ended 2025 with $465 million of cash at Ventures. That liquidity provides flexibility as we move forward with our Ventures separation planning. Beyond financial performance, we took concrete steps to optimize our portfolio. We are progressing on a strategic review of the broadcast business to ensure we are maximizing long-term shareholder value.

At the same time, we began planning and preparing -- or preparing for the potential separation of Ventures. We also continue to expect approximately $30 million in annualized run rate synergies by the second half of 2026 related to the JSA and LMA buy-ins, reinforcing the long-term earnings power of the core business. We have closed on 15 partner station acquisitions to date and anticipate almost all of the optimization process to be completed by midyear. And finally, we strengthened our balance sheet and created a deleveraging runway.

During the year, we completed a comprehensive debt refinancing in February, retired the final $89 million of our 2027 notes in October and established a $375 million accounts receivable facility in November. As a result, our nearest debt maturity is now December 2029. We ended the year with total debt of $4.4 billion, total liquidity of approximately $1.5 billion and total cash of $866 million. Deleveraging remains our top priority, and we expect cash generation from 2026 through 2028 to support that objective. Taken together, 2025 was a year of strong execution and structural progress, positioning Sinclair with improved flexibility, enhanced focus and a solid foundation as we enter 2026.

Turning to Slide 4. I'd like to provide an update on the current regulatory landscape. The industry is awaiting several important decisions that are now in front of the Federal Communications Commission. At the same time, the broader environment remains constructive for local broadcasters, and we continue to feel optimistic about the direction of significant issues. Starting with ownership. FCC Chairman Carr has repeatedly indicated support for modernizing what many consider outdated national ownership rules.

President Trump also expressed support for lifting the national ownership cap to facilitate transactions for local broadcasters. We believe there is growing recognition that the regulatory framework should better reflect today's competitive media landscape. Our ability to provide the impactful local journalism that our communities rely on hinges on these reforms.

With respect to ATSC 3.0 transition, the FCC is proceeding on accelerating the rollout remains pending. The commission is reviewing the record and a final decision is possible within the next 6 to 9 months. Advancing 3.0 remains important to the industry as it enhances spectral efficiency and enables new revenue streams for broadcasters over time.

The 8th Circuit decision vacated -- vacating the top 4 prohibition -- sorry, the 8th Circuit's decision vacated the top 4 provision and the FCC is approving transactions pursuant to that ruling. In addition, the onerous multicas rules were vacated and broadcasters are now again allowed to place a second top 4 station on a multicast channel. Also, as part of the FCC's quadrennial review, the commission is reviewing the potential to allow more than 2 stations to be owned by the same broadcaster in the same market, thus potentially creating even more opportunities for portfolio optimization.

In addition, the SEC proceeding regarding network affiliation agreements is still open. The SEC is reviewing the issue, though there has been no indication of timing of ultimate resolution. We remain engaged in that process and continue to believe that policies that strengthen local broadcasters are essential. Lastly, late this afternoon, the SEC launched an inquiry seeking public comment on the sports media marketplace, specifically examining how streaming exclusives affects consumers, broadcasters and free over-the-air access.

We applied the inquiry on TV sports rights. Sports programming has long supported localism and local news, and we believe the commission is asking the right questions in this new inquiry. In summary, while several items remain in process, the overall regulatory tone is supportive, and we believe the environment presents a meaningful opportunity for the industry over time.

Turning to Ventures. We continue to manage the portfolio with a clear focus on disciplined capital allocation and liquidity. In the fourth quarter, Ventures generated $86 million of cash distributions bringing the full year total to $104 million. Included in these distributions are exit proceeds from 3 residential apartment complexes generating $75 million. These distributions reflect ongoing minority exits and attractive portfolio management, and they demonstrate our ability to monetize investments while preserving upside in the broader portfolio.

At the same time, we remain selective on new capital deployment. We made incremental investments of $25 million in the fourth quarter and $50 million for the full year. That measure pace reflects our disciplined underwriting standards and our commitment to prioritizing returns and balance sheet flexibility. We ended the year with $465 million in cash and cash equivalents at Ventures. That strong liquidity position provides optionality as we advance separating planning and continue to evaluate capital allocation opportunities. Overall, Ventures continues to generate meaningful cash while maintaining a solid capital base, positioning the portfolio to support shareholder value creation going forward.

Building on that performance. Slide 6 highlights how the portfolio itself is evolving with over half of the minority investment portfolio now in cash. Our strategy continues to shift from passive minority investments towards majority controlled operating businesses. The objective is straightforward: Greater operational influence, stronger alignment with long-term value creation and improved visibility into earnings and cash flow.

As part of that transition, during the quarter, we initiated a process to monetize select legacy private equity and Venture capital fund positions through secondary market transactions. This represents a deliberate step in repositioning the portfolio and reupdating capital towards areas where we can drive more direct impact. At the same time, we're actively developing a pipeline of acquisition opportunities. Our focus remains on control investments in businesses characterized by durable demand, recurring or nondiscretionary revenue streams and strong free cash flow conversion.

Collectively, these actions reflect a portfolio that is becoming more focused, more strategic and increasingly aligned with our long-term objectives. With that, I'll turn the call over to Rob to walk through our operational highlights.

Thank you, Chris, and good afternoon, everyone. Let me walk you through our operational performance and how we're positioned heading into 2026 on Slide 7. We delivered solid growth in core advertising with fourth quarter core revenue, up 14% year-over-year driven by strength across most major categories and boosted by our acquisition of Digital Remedy.

Advertisers continue to prioritize platforms that provide scale, interactivity and live engagement and broadcast consistently delivers on those attributes. That performance is supported by the continued strength of broadcast audiences, particularly around live sporting events. In 2025, 48 of the top 50 most-watched telecasts aired on broadcast television and 96 of the top 100 were live sporting events.

As sports leagues prioritize maximizing fan engagement and broadening their audience broadcast, television remains the most powerful platform for delivering both unmatched national scale and deep local market penetration. These points are emphasized by the NBA returning to NBC beginning with the 2025/2026 season and MLB returning baseball back to NBC in 2026. Those figures and new rights deals reinforce a clear message. Broadcast remains the dominant platform for wide, real-time viewing on a national scale.

On the distribution side, we are beginning to see signs of stabilization in industry subscriber trends, while traditional pay TV has faced sustained churn over the past several years. Recent data from MVPD partners suggests moderating losses and, in some cases, modest net additions. Early evidence indicates that bundling strategies, especially those pairing linear video with streaming services may be improving the overall consumer value proposition.

The potential of stabilizing subscriber trends is meaningful to our business. Distribution revenue remained significant, the recurring component of the broadcast model and improved churn dynamics support greater long-term visibility and resilience in that revenue stream. Beyond Linear, we continue to see engagement growth across podcasts and social platforms. We recently added a new podcast on our national lineup, expanding into the NBA with our cousins podcast posted by NBA hall of famers and real-life cousins, Vince Carter and Tracy McGrady.

This addition further strengthened our portfolio of professional sports content. As we broaden our audience touch points, we are also extending our brands into live in-person experiences. Recent activations, including the Tailgate Tour and [indiscernible] demonstrate our ability to engage audiences beyond traditional broadcast, while creating meaningful opportunities for advertising partners to engage with their consumers.

Our next activation will be at the World Cup hosted by Unfiltered Soccer Landon Donovan and Tim Howard, who have amongst the most national soccer team appearances of any U.S. players. Now looking ahead, 2026 is shaping up to be a strong year for live sports, with the Winter Olympics delivering record ratings, up over 90% versus the 2022 games and a record number of FIFA World Cup matches scheduled for broadcast on television. These additional events come alongside continued strength in NFL and college football program, and we look forward to the college football championships moving back to ABC next year.

In addition, in December, Sinclair launched Amazing America 250 from Neighborhood to Nation, a multi-platform celebration of U.S. history, culture, innovation and community spirit. In combination, these marquee events reinforce the long-term value of broadcast by driving reach, ratings and premium advertising demand. As Narinder will discuss in a moment, we anticipate 2026 being a record year for our political revenues in a midterm election cycle exceeding our 2022 political revenues.

In summary, Sinclair continues to execute well on its core broadcast business as the industry prepares for further consolidation. Broadcast differentiated revenue streams remain durable, stressing the years like these as we enter a political and sports-heavy 2026. And both ratings and subscriber trends are showing positive momentum heading into the new year.

With that, I'll turn the call over to Narinder to discuss the financial results in more detail.

Thank you, Rob, and good afternoon, everyone. Turning to Slide 8. Our fourth quarter results exceeded the midpoint of guidance across the total company and our local media and tennis reporting segments, with adjusted EBITDA coming in above the high end of our ranges across all 3.

At the total company level, revenue was $836 million, above the midpoint of our guidance range. This performance was supported by distribution revenue of $438 million as subscriber churn moderated across key MVPD partners. Core advertising revenue of $354 million reflected solid demand across most major categories and continued strength in live sports, including the NFL and college football. Adjusted EBITDA was $168 million, exceeding the high end of our guidance range.

This outperformance reflects both revenue strength and continued disciplined cost management initiatives during the quarter. In the Local Media segment, total revenue of $734 million benefited from the same distribution and advertising trends we just discussed. Distribution revenue of $384 million and core advertising revenue of $312 million, both exceeded the midpoint of our guidance range. Segment adjusted EBITDA of $153 million comfortably beat the high end of guidance. demonstrating solid cost management on the revenue outperformance.

Within the Tennis segment, total revenue of $62 million was above the midpoint of guidance. Adjusted EBITDA of $21 million exceeded the high end of the $12 million to $15 million range, reflecting continued expense discipline and steady performance during the quarter. Capital expenditures on a consolidated basis were $19 million, consistent with prior year levels and in line with the midpoint of our $18 million to $20 million guidance range.

Overall, the quarter reflects strong execution, improving subscriber trends, healthy advertising demand and prudent cost management across the company. Continuing to Slide 9. I'll walk through our year-over-year performance for the fourth quarter across the total company in each segment. At the total company level, revenue declined to $836 million from $1 billion in the prior year quarter. As expected, the primary driver for the year-over-year change was political revenue. In the fourth quarter of 2024, we generated $203 million of political revenue compared to $14 million this quarter, reflecting the shift from a political to a nonpolitical year.

Core advertising, which excludes critical advertising revenue increased 14% year-over-year on an as-reported basis driven by stronger order demand and incremental digital revenue, including contributions from the Digital Remedy acquisition. Pro forma core advertising growth was 5% year-over-year. Distribution revenue declined 1% year-over-year, largely due to the divestiture of all markets to Rincon during the year.

Adjusted EBITDA was $168 million compared to $330 million in the prior year quarter with the decline primarily attributable to the expected reduction in political revenue in nonelection cycles. In the Local Media segment, revenue declined to $734 million from $932 million in the prior year, again, reflecting the absence of material vertical revenue in 2025.

Importantly, core advertising revenue increased 4% as reported and 6% pro forma, supported by strong live sports demand and continued growth in our podcast lineup. Distribution revenue declined 2% as reported and 1% pro forma, consistent with the previously mentioned divestitures and industry continued subscriber churn, not completely offset by step-ups.

Local Media adjusted EBITDA was $153 million compared to $321 million in the prior year quarter. The decline was driven primarily by the lower clinical revenue and was less than the year-over-year total revenue reduction, reflecting disciplined cost management.

Turning to the Tennis segment. Total revenue increased to $62 million from $57 million in the prior year quarter. Core advertising revenue increased 20%, supported by household and total viewer ratings growth of 8% and a 12% increase in minutes viewed on Tennis Channel 2, our free ad-supported streaming channel. Distribution revenue increased 10% driven by 25% growth in direct-to-consumer subscribers. Adjusted EBITDA improved 10% year-over-year to $21 million, benefiting from higher revenue and lower production expenses.

Overall, while total company reflect -- results reflect the cyclical impact of political revenue, underlying core advertising trends, distribution stability and continued cost discipline demonstrate solid operational execution across the portfolio.

Turning to Slide 10. This outlines our debt maturity profile and liquidity position at year-end. Including the borrowing under the AR facility, total Sinclair Television Group, or STG, debt was $4.4 billion. Following our refinancing activity, and retirement of 2027 notes in 2025, our nearest material maturity, excluding the AR facility is now in December 2029. At year-end, as defined in our credit agreement, first lien leverage was 1.5x, net first lien leverage was 3.9x and total net leverage was 5.3x. And we ended the year with $866 million in consolidated cash, including $401 million at STG and $465 million at Ventures. Including revolver availability, total liquidity was approximately $1.5 billion.

On Slide 11, before turning to 2026 guidance. I want to spend a minute on the balance sheet. We laid out a multiyear runway to reduce net leverage through actions that are firmly within our control. First, with the comprehensive refinancing in February 2025, we moved out our debt maturities so that our nearest debt maturity is now December 2029. That materially reduced refinancing risk and gives us time to execute the operating plan and a broader strategic review from a position of strength.

Second, we have been active and intentional about debt reduction, including retiring the last $89 million of our 2027 notes in October of 2025. Third, in November 2025, we added more flexibility with a 3-year $375 million AR securitization facility. It enhances liquidity and helps us be opportunistic with debt reduction actions when we see attractive opportunities. Then importantly, we have 2 strong visible cash flow windows in front of us. This year, 2026 is expected to be the record midterm political year, and our priority is to convert that incremental political cash generation directly into net debt reduction.

And looking beyond that, 2028 is also expected to be a meaningful political year with the potential for the first dual open primaries in over a decade, creating another opportunity to drive cash flow and further reduce net debt. We have improved flexibility, and we have a clear plan to use upcoming political cycles, along with continued cost discipline to drive sustained deleveraging while preserving the strategic capacity to add then value-creating opportunities emerge.

Turning to Slide 12. Let me walk through our full year 2026 guidance. As a reminder, last quarter, we shared preliminary baseline expectations for the key drivers, political, core distribution and CapEx. Today's full year guidance is consistent with that framework and it reflects what we are seeing in pacing and market conditions as of today. For the total company, we are guiding total revenue of $3.4 billion to $3.54 billion, including distribution revenue of $1.72 billion to $1.79 billion, and core advertising revenue of $1.26 billion to $1.3 billion and political advertising revenue of at least $333 million.

We are guiding to adjusted EBITDA for a total company of $700 million to $740 million, with CapEx in line with last year between the range of $75 million to $80 million. net interest expense in the range of $300 million to $310 million and net cash tax payments of $34 million to $45 million. On the assumptions, I'd like to highlight 4 things, which are consistent with what we said last quarter.

First, for core advertising, they're assuming stable core trends, supported by sports heavy broadcast calendar. At the same time, we expect a typical political dynamic as political demand ramps consistent with prior comparable cycles, and we are remaining appropriately cautious given macro headwinds in certain categories. Second, for political, we continue to expect at least a strong [indiscernible] midterm performance of $333 million and the landscape across several of our major markets supports that baseline.

We are seeing meaningful activity in markets like North Carolina, [ Maine ] Michigan, Nevada, Ohio and Texas primaries with additional competitive house races also in play. It is still early, but our position in these markets gives us confidence in that at least baseline. Third, for distribution, 2026 is a renewal year, and our guidance assumes steady gross distribution revenue with subscriber churn moderating across key MVPDs and churn levels staying comparable to our current experience.

Note that our distribution revenue guidance only considers incremental contribution from partner station acquisitions that have already closed. While several partner station optimization activities are pending, we expect to realize the full run rate EBITDA benefit of $30 million by the second half of 2026. And finally, on capital spending, we're guiding to $75 million to $80 million in 2026, essentially flat with 2025, reflecting a more mature phase of our infrastructure transformation with spend focused on maintenance resiliency and high return technology investments while keeping CapEx discipline to support continued deleveraging.

Stepping back, this guidance reflects a plan we can execute in today's environment, stable or strong political, disciplined investment levels and importantly, it underpins what we highlighted on our prior slide, which is our intent to translate that cash generation into continued balance sheet improvement. With that, I'll turn the call back to Chris for some closing remarks.

Thanks, Narinder. Before we move forward, I'd like to take a moment to highlight something important to our long-term success. Our commitment to the communities we serve which you can see on Slide 13. Through Sinclair Cares in 2025, our stations donated an estimated $5.7 million in on-air commercial time and supported more than 300 charitable organizations across our markets. We helped raise nearly $23 million for local causes. Our efforts resulted in nearly 5 million pounds of food collected, more than 2.2 million meals provided, over 184,000 toys distributed and more than 107,000 diapers supplied and thousands of school supplies delivered to students in need. .

These initiatives reflect the strength of our local footprint and the trusted relationships we've built within our communities. While financial performance is essential, our role as community broadcaster carries responsibilities. We take that responsibility seriously. We're also proud to launch our Amazing America 250 campaign, which will honor America's legacy across Sinclair's portfolio of assets throughout 2026. Our community engagement enriches local lives in the markets that we serve while also strengthening our brands, deepening our advertiser relationships and reinforcing the long-term value of our global franchises.

As we wrap up on Slide 14, let me briefly summarize where we stand and how we are positioned headed into 2026 and beyond. First, we continued to execute and build momentum on our core broadcast business. We delivered strong results that met or exceeded our expectations, translating into meaningful cash generation. Core advertising trends remain stable, live sports and subscriber churn across key MVPD partners is showing signs of moderation. Second, we have set the foundation for a deleveraging path with substantial flexibility. Over the past year, we extended our maturity runway, increased liquidity and established a defined priority around reducing leverage.

Our capital structure is now positioned to support both disciplined debt reduction and strategic optionality. We also remain prepared for industry consolidation. -- rationalizing the portfolio and acting opportunistically as conditions evolve, remain key strategic objectives, particularly within a regulatory environment that continues to move in a constructive direction for local broadcasters.

Within Ventures, value realization continues. We generated more than $100 million in cash distributions during 2025, primarily from minority exits while continuing to reposition the portfolio towards greater operational control and long-term value creation. Looking ahead, our 2026 outlook is anchored by a resilient revenue mix strong midterm political revenue expectations, a sports-heavy broadcast calendar and continued cost discipline. Overall, we believe Sinclair is positioned with improving operational momentum enhanced balance sheet flexibility and clear strategic direction as we enter 2026.

With that, operator, we are now ready to open the line for questions.

[Operator Instructions] Your first question is coming from Dan Kurnos from The Benchmark StoneX. .

Before I ask my first question, I just want to say I really appreciate, Narinder, all of the incremental detail, especially in the guide, super helpful. So I appreciate all the transparency that you guys put together on this. Chris, first question, obviously, just around M&A in the environment, you gave sort of a good background for what to expect. I think everybody is waiting to see when or how, I guess, Chairman Carr is going to put cap [ capital ] elimination on the docket. Does it exclude networks? What's the timing? I think there's some hope that it's sooner rather than later. We obviously know you guys have been pretty public in sort of your pursuit of M&A.

But to the extent that do you think things change, if we get it on the docket, if we push it through, we get past whatever legal challenges, mean does that change the way you think that everyone else in the space will be sort of willing to engage around M&A and what that might mean for you guys?

Well, there's no doubt that having a precedence of such a large transaction like Nexstar, Tegna go through and people seeing what the rules are on a confirmed basis is going to be exceptionally helpful for M&A going forward. So I think your -- what you alluded to there is spot on that it's going to be very helpful in terms of paving the way for future transactions. And we specifically are not standing still, right? We're very focused and active on a number of smaller portfolio optimization opportunities. And we're very active in our strategic review of the broadcast business looking for bigger transformational opportunities.

And then just on the distribution side, look, number is certainly better. I think everyone is hopeful that we continue to see sub declines ease going forward, certainly positive out of charter you guys get your reverse shot, if you will, at the end of this year. So I don't know if you want to comment on what you think net looks like in the out years. I know you guys talked about all the drivers of growth, including political all the way through '28. But if net becomes a healthier tailwind, that would be yet another arrow in the quiver. So just curious if you have any thoughts on how that might look.

Yes, I think you've got it, spot on there, Dan. I mean look, we gave outlook for gross distribution for the year. And we really don't have the benefit of any large renewals through until the very end of the year. So I think that really shows the confidence that we have in the business. We have -- we set up great deals mainly back in 2024. And and we're reaping the benefits of those.

We're seeing churn improve from significant large MVPDs. And we think the strategies that they deploy in terms of the great rebundling and what we're seeing in terms of stream inflation and prices continue to increase there is all auguring well to the fundamentals of the business. And also things like [ skinny bundles ], for instance, which are offering cheaper alternatives to consumers that include the broadcast stations. So there's a lot of trends in place that make us very positive in terms of our future long-term outlook for net returns.

your next question is coming from Aaron Watts from Deutsche Bank.

Two questions, if I may. First, on core advertising in the TV group, clearly, a healthy finish to the year. Is that reflective of an improved ad environment or more due to the crowd out comparison in the prior year. Are you seeing momentum sustain here in the new year? And relatedly, can you share what percent auto was of the book in '25? Was it up or down and what you're seeing for that category this year?

I can handle that, Dan, this is Rob.

What we have is it has not to do with the crowd out. We actually increased pace after the political cycle ended. And so it was a healthy return, and it shows cases that the advertisers have [ big tension ] for live sports for the return of college football and NFL football. It also strengthened the auto spend.

The auto spend in 2025 was down mid-single digits, and that has to do with the tariffs and consumer confidence from the beginning part of the year. In 2026, we have some insight from our MVCs where automotive is very strong. However, that's the smallest part of our portfolio. So we expect that the MVCs around the country with Legendary February will be showcasing strong auto growth.

We have moved away from that high dependence on automotive over the last several years as well but services and legal being some of our top categories as well and so it bodes well for us going into 2026, following legendary February with Fox's most amount of broadcast games of the World Cup with many in prime time. And again, with the Olympics being up over 90% ratings, we expect to see that effect in World Cup, and we're significantly ahead of our sales around World Cup, and to support the World Cup, we have Landon Donovan and Tim Howard with Unfiltered Soccer, and we'll be releasing a new women's soccer with Kealia Watt, JJ Watt's wife and Julie from the World Cup Team. So we're going to be able to support with activations and being strong around the World Cup to help drive our core advertising.

And then, Aaron, maybe I would just add on to that. So from a very high level, you certainly saw some weakness in Q2 and Q3 from economic uncertainty, and we felt like that unwound in fourth quarter. So you had the benefit from crowd out reversing and economic conditions becoming more certain and sort of a more normal advertising market.

Q1 as Rob noted will be hard to get a good read on because NBCs will be so big in that quarter, given all the programming that they had like the Olympics and Super Bowl. But we're optimistic as you look into Q2 and Q3 and things like tax returns refunds that will be hitting the marketplace soon that you're going to see a continued rebound from the summer of last year.

Okay. That's really helpful. And if I could ask 1 more, Chris. As you continue to think about strategic opportunities, how much of an impediment are you finding leverage to be in those discussions, if at all? And I believe you had previously suggested that cash from Ventures could potentially play a role in consolidation at the TV group, helping bring pro forma leverage levels down. I don't think we saw that in the Scripps offer. So I just wanted to get your latest thoughts on the fungibility of cash, leverage and the interplay of those for M&A.

Yes. So we have not found that leverage has been an issue in terms of any of the discussions that we've had or are having as it relates to combinations. We've been -- we do have significant liquidity. We have significant cash. So we -- as you saw in the Scripps offer, we were able to actually put cash as a component of the offer. And so, so far, that has not been an impediment whatsoever. And that said, we've said publicly and we'll say again that to the extent it's needed to unlock a strategic and transformative transaction, we would use resources at Ventures. And so the ideal outcome here, as I've stated before, is really a merger on the broadcast side with a spin of Ventures. And we still think that is very much possible and are working hard to achieve that. .

Your next question is coming from David Karnovsky from JPMorgan.

Chris, just on the NFL, it's getting a lot of attention in the market. I think is kind of making an assumption of a higher collective broadcast payment to the league. And I'm curious in that scenario if it plays out, how do you think about the cost getting passed through to the various points of the ecosystem, whether that's your payments to the network, distributor payments to you or kind of ultimately what the consumer will bear here?

Sure. So first, let me comment on the overall situation with the NFL, which there's a lot of news on. And according to most reports, it's the networks that have initiated these early negotiations and these renewals are really 3 years prior to the first opt out.

So we really think that benefits the incumbents, and we welcome early NFL deals to create longer-term certainty with the ecosystem. So we view that overall as a positive. We think that the incumbent broadcast networks are very well positioned to renew and there is potential for new packages to be created to increase the overall payments to the NFL without having to overburden the existing partners with too high of increases. Now being said to your question around how does that cost get absorbed by the ecosystem? Well, we have a comp in that, that just recently happened, where the NBC signed up a very expensive new deal with NBA.

And the -- our expectations heading to the end of the year in which that happened, we set our expectations for what we would -- we saw in our renewal with NBC would be. And then midyear they sign up the NBA deal. And then at the end of the year, we renewed with NBC, and we exceeded our expectations that were set before we even knew about the existence of the NBA deal.

So long story short is we did not have to absorb the extra cost of the NBA and those costs were largely absorbed by the streaming platform. So the networks all have streaming platforms now. Even Fox has launched its own streaming platform. And in terms of the dynamic between us and the networks, we think we've got a strong political position with things like the FCC proceeding on the network affiliate relationship. And then you also probably saw today another SEC inquiry around the sports marketplace, it's sports on broadcast, more specifically looking into this issue.

And then we also have a very strong commercial position in terms of the fact that all of these rights are now on broadcast and on streaming and that cost needs to be more equitably shared between those 2 sides of the house, if you will. And right now, if anything, broadcast is overpaying for what it gets relative to the streaming side of the business.

Your next question is coming from Benjamin Soff from Deutsche Bank.

Your expenses outperformed guidance nicely this quarter. Can you talk about where that strength came from? And any additional things you're working on in 2026 from an expense management standpoint. And then for Narinder, just a housekeeping question. Could you help us better understand how much of that $30 million from the JSA buy-ins is included in your guidance? And how much opportunity is there for additional similar deals that you haven't already announced? .

Yes, Ben, thanks for the question. On the expense side of the equation, it was -- there was no one particular line to call up here. as I referenced in my prepared remarks, when you look at the various segments, Tennis outperformed on the production side. and Local Media segment outperformed on the sales and digital expenses as well as various other expense line items.

I think I've mentioned this in my prior quarterly call as well that there's a high degree of emphasis here at Sinclair on looking at our overall cost structure and figuring out how best to deliver the top line that we have. And the team is very dialed in and very engaged in the conversation. And so you're just seeing the outcome of that in the quarterly results. So not one particular thing to call out, I would say it was across the board. But I highlighted a few key points there for you.

On the specific JSA LMA question, we haven't really broken that out, but I would say we are maybe 70% of the way there on that. And part of that is baked into the distribution guide, but there are puts and takes there. Given the current subscriber churn, you will not -- if you try to do the math and try to add the numbers and you won't probably get there because even with subscriber churn staying consistent, you will see from a dollar -- absolute dollar perspective distribution is going to be down. So I would say we are about 70% of the way complete on the JSA LMA. .

[Operator Instructions] Your next question is coming from Fernando Lima from Morgan Stanley.

Chris could go back to M&A and consolidation. I know that so far with renewed interest in certain assets, interested in hearing your thoughts that if there's no deal in the near term and assuming that the Nexstar TEGNA merger gets approved, but they have to sell some stations. Are these assets something that you could potentially be interested in? Is that something you would be willing to wait if we can say that.

Sorry, can you clarify, when you say these assets, what assets are you referring to?

If they are required to sell some stations as part of the M&A approval?

Okay. I got it. So yes, to the extent that there are divestitures required in that combination, we certainly would be quite interested in looking at those, especially if they create duopoly opportunities in our markets, we've already completed recently to duopoly combinations, 1 in province and one in Tulsa, and those are very accretive to our bottom line. And to the extent we can do more of those with sort of one-off station acquisitions, be it from other parties, and we have a number of different processes and conversations going on in that front. But to the extent there's also an opportunity to buy those out of the Nexstar TEGNA deal, we would be interested in that.

Thank you. And that concludes our Q&A session. I will now hand the conference back to Chris Ripley for closing remarks. Please go ahead.

Thank you for joining us today for the Sinclair Q4 earnings call. If you have any questions, please give us a call.

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

Greetings, and welcome to the Sinclair Broadcast Group's Third Quarter 2025 Earnings Conference Call.

[Operator Instructions]

And please note, this conference is being recorded. I will now turn the conference over to your host, Chris King, Vice President of Investor Relations. The floor is yours.

Thank you. Good afternoon, everyone, and thank you for joining Sinclair's Third Quarter 2025 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 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 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. These measures are not formulated in accordance with GAAP, are 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.

Good afternoon, everyone, and thank you for joining us. Let me begin on Slide 3 with our third quarter results. We delivered strong performance and met or exceeded guidance across all key metrics. Total revenue of $773 million came in higher than the high end of our guidance range. Core revenues was up 7% year-over-year on an as-reported basis. Most notably, adjusted EBITDA of $100 million exceeded the high end of our guidance range. This reflects our operational discipline and continued focus on cost management across the business.

Turning to Slide 4. I'm pleased to report significant progress on our station portfolio optimization within our Broadcast segment, which drives immediate operational efficiencies. As of today, 11 partner station acquisitions have closed. 12 have received FCC approval and are awaiting final closing, 10 are filed and pending SEC approval, and we plan to file several additional partner station acquisitions by year-end. Once all current and planned partner station acquisitions are completed, we expect to generate at least $30 million in incremental annualized adjusted EBITDA with minimal upfront capital requirements. We expect to reach the full run rate EBITDA benefit by second half of 2026.

Moving to Slide 5. I want to address the evolving regulatory landscape and its impact on our industry. Recent decisions by the FCC and federal court rulings have created a more constructive M&A environment for broadcasters. The elimination of restrictions on Big 4 local market ownership enables highly accretive consolidation opportunities, that were not possible before. We anticipate the SEC may raise or eliminate the 39% nationwide ownership cap in the first half of 2026, which would further remove barriers to value-creating transactions.

These regulatory changes came at a critical time. The broadcast sector is facing secular challenges within linear TV while having a unique opportunity for significant consolidation. We believe the industry is at an inflection point where scale and operational efficiency will increasingly separate high-performing companies from the rest. Against this backdrop, in mid-August, we launched a strategic review of our broadcast business and an evaluation of a potential separation of ventures to optimize value creation across our portfolio.

Under the new regulatory regime, we have already executed several transactions, including partner station acquisitions and select acquisitions and divestitures. Given the magnitude of the opportunity ahead, let me spend a moment discussing what broader industry consolidation could potentially look like and why we believe it represents a transformational opportunity for the sector. The broadcast sector is ripe for consolidation given the various secular and economic challenges we collectively face.

Based on our analysis and industry benchmarking, synergies from broadcast combinations typically come from 3 primary sources: distribution revenue optimization, corporate overhead rationalization and the creation of multistation markets were permitted. One potential path for industry evolution could involve consolidating into 2 similarly sized scale broadcast groups, creating another group comparable in size to the large broadcast combination announced in August, could unlock an estimated $600 million to $900 million in annual synergies through mergers and subsequent portfolio optimizations. This level of consolidation, which strengthened the industry's financial footing and position broadcasters as more capable competitors to big media and big tech.

Equally important, it would help safeguard local, independent and diverse news coverage that communities across the country rely on. While we present this as one potential industry scenario rather than a prediction, the fundamental point is clear. The regulatory environment now enables transformational consolidation that can benefit broadcast group shareholders, creditors, employees and the communities we serve. Sinclair is well positioned in this environment, and we're actively evaluating how best to participate to maximize value for our stakeholders.

Let me now turn the call over to Rob to discuss our political revenue outlook and provide an update on Edge [indiscernible] before we turn it over to Narinder to review our financial results and provide the outlook for the business.

Thanks, Chris. Turning to Slide 6, we are providing an early outlook for what we expect to be a record-breaking year for midterm political advertising revenue in 2026. Based on current pacing and early conversations with political buyers, we expect political advertising revenue to be at least equal to our 2022 record of $333 million for a midterm election year. Several factors support this outlook, highly competitive Senate race in North Carolina, Gubernatorial race in Nevada showing early spending momentum, significant races in battleground states, including Maine, Michigan and Ohio, as well as our strong station footprint in key competitive districts.

Looking ahead to 2028, we are preparing for what should be one of the strongest political cycles in recent history. It is expected to be the first dual open presidential primary since 2016, historically a high revenue environment for local broadcasters. Let me provide a brief update now on next-gen broadcast. In late October, the FCC unanimously adopted a notice of proposed rule making, or NPRM, that proposes giving broadcasters greater flexibility to transition away from ATSC 1.0, which would free up significant spectrum capacity for next-gen TV services.

Most notably, the NPRM proposes eliminating the substantially similar programming requirement and allowing patients to sunset their ATSC 1.0 signals, which will open significant spectrum capacity to drive improved video offerings and data casting use cases that [indiscernible] is commercializing. We're encouraged by the commission's proactive approach and look forward to working with the industry to advance the transition to ATSC 3.0.

Turning to Edge mean, our joint venture with our broadcast peers, CEO [ Conrad Thompson ] is actively expanding the leadership team and securing strategic commercial partnerships. We're particularly excited about an upcoming product showcase with a major automotive manufacturer at CES in January, and we look forward to sharing more concrete progress metrics on future calls.

Now let me turn the call over to Narinder.

Thank you, Rob, and good afternoon, everyone. Turning to Slide 7. During the quarter, Ventures received $2 million in cash distributions while making approximately $6 million in incremental investments. Our Ventures segment ended the quarter with $404 million in cash. This cash position provides strategic flexibility while primarily designated for Ventures investments and opportunistic shareholder returns. Ventures cash could also support transformative transactions in our broadcast business as regulatory conditions continue to improve.

Slide 8 highlights our current capital structure with $526 million in consolidated cash at quarter end. In early October, we redeemed the final $89 million of our 2027 senior unsecured [ 5/8s ] notes at par. With this redemption complete, we have no material debt maturities until the end of December 2029, enhancing our financial flexibility as we execute on strategic initiatives. In addition, we expect to close on a 3-year $375 million accounts receivable or AR securitization facility at our Local Media segment as soon as [indiscernible] this month. This AR facility will further enhance our flexibility to pursue strategic consolidation opportunities and optimize our balance sheet.

Turning to Slide 9 and our consolidated third quarter results. Let me walk through the key drivers of our strong performance. Total advertising revenue came in close to the high end of our guidance range, driven by momentum across most categories with year-over-year growth accelerating in September as the NFL and college football seasons kicked off. Distribution revenue also tracked towards the high end of our guidance range as subscriber churn modestly improved at key MVPDs versus our forecast. Consolidated media expenses came in below our guidance, driven by lower than forecasted engineering digital and sales-related costs due to cost containment initiatives and deferral of certain expenses forecasted in the quarter. These results drove adjusted EBITDA of $100 million above the midpoint of our guidance range. GAAP expenditures at $22 million were $5 million below the midpoint of our guidance range due to the deferral of certain projects.

Turning to Slide 10 to exact the financial results by segment. Distribution revenue came in at the high end of our guidance range in our Local Media segment, driven by improving subscriber churn while core advertising revenue beat guidance. As I mentioned earlier, most categories started to show improvement throughout the quarter, particularly at the NFL and college football return in September. Both media expenses and adjusted EBITDA were favorable to our guidance ranges for local media. Tennis channel results were broadly in line with our guidance ranges on both total revenue and adjusted EBITDA.

On Slide 11, we introduced our consolidated fourth quarter 2025 guidance. As a reminder, the fourth quarter of 2024, included $203 million in political advertising revenue during the presidential election cycle, which will obviously not reoccur this year. Note that we do not incorporate any anticipated or pending M&A activity into our guidance and year-over-year comparisons are on an as-reported basis. Media revenue is expected in the range of $809 million to $845 million, which reflects the anticipated year-over-year decline in political advertising revenue as we cycle against the strong 2024 presidential election year.

Core advertising revenue is expected in the range of $340 million to $360 million, up more than 10% year-over-year at the midpoint of the guidance range as we are seeing momentum continue in most advertising categories. Distribution revenue is expected to be in the range of $429 million to $441 million. Due to the life renewal cycle in 2025, the rate escalators do not fully offset traditional MVPD subscriber losses, though we are seeing improving churn trends at several key distributors and continued virtual MVPD subscriber growth. Consolidated adjusted EBITDA guidance of $132 million to $154 million reflects our continued cost discipline.

Before we open for questions, I want to provide preliminary thoughts on full year 2026 on Slide 12. While we'll provide full guidance on the fourth quarter call in February, I believe it's valuable to establish baseline expectations now for key revenue categories and capital expenditures. Obviously, this is not exhaustive, but covers the primary drivers of our 2026 outlook. As Rob mentioned earlier, we expect 2026 variable advertised revenue to be at least comparable to our strong 2022 midterm election year performance of $333 million. The current competitive landscape in our key markets suggest we are well positioned to potentially exceed this baseline.

For core advertising revenue, we expect to deliver flat to low single-digit growth year-over-year. Strong political revenue expectations will drive crowd-out as it ramps in the back half of 2026 and macroeconomic headwinds could pressure certain categories. However, we remained well positioned given our strong ratings and broadcast advertisin' proven effectiveness. We anticipate meaningful rating growth for our network partners as several major live sporting events are taking place on broadcast next year, such as the Fifa World Cup, the Winter Olympics and a full year of the NBA on NBC.

For distribution revenue, 2026 will be a lighter renewal year with no traditional MVPDs up for renewal. As a result, we expect relatively flat gross distribution revenue year-over-year, assuming stable churn levels comparable to those experienced in 2025. Note that our preliminary outlook does not include incremental contribution from partner station acquisitions that we plan to close in the near future, which would provide upside to this baseline expectation.

However, 2027 represents a significant opportunity with most of the traditional MVPD subscribers up for renewal. Successful execution on these renewals will drive meaningful revenue growth as updated rate structures take effect. It is worth noting that 3 of our big 4 networks are up for renewal in late 2026 where we have a significant opportunity to improve our reverse retrans economics.

We expect 2026 capital expenditures to remain consistent with 2025 levels. This expectation reflects maturing cloud infrastructure investments and the operational efficiencies from our technology transformation. Our disciplined capital allocation enables us to direct more free cash flow toward debt reduction while enhancing our broadcast facilities and strategic capabilities. These preliminary views represent what we believe are prudent baseline expectations. We will provide full 2026 guidance when we report our fourth quarter 2025 results in February.

One additional item to note. Beginning with our 2026 guidance in February, we will shift to an annual guidance framework, replacing our current quarterly guidance approach. This change reflects our focus on long-term strategic execution particularly given the inherent quarterly variability in our revenue streams. We'll continue providing annual guidance on key metrics and update that guidance when warranted by material changes. We will maintain orderly commentary on business trends during our earnings calls to keep you informed of our progress. This approach enables our stakeholders and investors to focus on the fundamental drivers of sustainable and long-term value creation.

So in summary, 2026 represents a substantial opportunity for us to demonstrate the cash generating power and operating leverage of our business model during a political cycle. The strong cash generation will support delevering while allowing us to advance our strategic initiatives. I will now turn the call back to Chris for some closing remarks before we open the call to Q&A.

Thanks, Narinder. Let me wrap up with our key takeaways on Slide 13. Earlier this quarter, we launched our comprehensive strategic review of our broadcast business and began work to separate ventures. We continue to believe that significant value to all of the industry's stakeholders can be achieved through consolidation of the major players as the evolving regulations create unprecedented opportunities across the sector. I want to welcome our new Ventures principle, Craig Blank, who has been tasked with managing exits in our minority investment portfolio while also sourcing new majority investments that will help drive strong risk-adjusted returns as we enhance our investment strategy and optimize our portfolio management.

Our third quarter results underscore the strength and resilience of our business model. We exceeded guidance across all key metrics, with adjusted EBITDA 22% above our guidance midpoint, driven by operational discipline and improving trends in core advertising. We further strengthened our balance sheet by retiring the final $89 million of our 2027 notes, leaving no material maturities until December of 2029. Our fourth quarter guidance anticipates continued improving trends in core advertising and seasonally higher distribution revenues and our 2026 preliminary outlook anticipates record midterm political revenue, continued progress on our operational initiatives and substantial free cash flow generation that will further strengthen our financial position. We are as optimistic as ever about the opportunities ahead for both Sinclair and the broadcast industries. Thank you for joining us today. Rob, Narinder and I are now happy to take your questions.

[Operator Instructions]

Our first question is coming from Dan Kurnos with The Benchmark Company.

Great. Obviously, nice print guys. Chris, a little off the wall for you maybe. But since YouTube was so noisy last quarter. Just do you have any high-level thoughts on what's going on with sort of YouTube, Disney right now and just the broader ramifications for how these things are going to end up playing out in the MVPuniverse? And then one for Narinder. Now that you finally had a little bit of time to get your hands behind the wheel here, looks like you've done a great job already on the expense side. I know you're going to leave no rock unturned but just how much more would do you think you have to chop here from an efficiency standpoint?

Thanks, Dan. YouTube has obviously become a very significant player in the industry and as I'm sure you referenced and you remember, last quarter was a source of some disappointment on the distribution side. And some of that is definitely reversing out. We expect that to improve into fourth quarter because as you remember, there's a lag. So the people coming back for football, most of that benefit we will start to see in fourth quarter, the end of the fourth quarter. But more importantly, YouTube and the rest of the virtuals, we've talked a lot about. And as you know, there's currently a blackout going on between Disney and YouTube TV. So we and many others are caught in this dispute between Disney, ABC and YouTube TV. More accurately, it's 2 media giants, right, Disney and Google. And what's been occurring with the virtual MVPDs and specifically this situation is a more recent phenomenon. And that we, as local broadcasters have no say in whether our content and the content we pay to air will be distributed to local viewers.

This was clearly not the intent of the communications app and seems to be, from our perspective, an antitrust issue as well. This dispute and others like it continue to hurt local viewers and local journalism -- the ecosystem of local journalism. So as we and many broadcasters have discussed with the SEC and antitrust regulators, we believe this practice needs to be stopped. Disney, ABC and other networks should not be able to dictate to us whether we can or cannot distribute content to YouTube TV or even Hulu and Fubo, which coincidentally are now also owned by Disney.

And the FCC has opened an investigation into hurtful network affiliation practices, and we're seeing those hurtful practices play out in front of our eyes as viewers are missing local news and local sports, particularly concerning is that consumers are now being forced to buy more streaming services from one of the parties in the dispute to get the content that they literally already paid for. We call on Congress, the FCC and antitrust regulators to further review this and stop the harm to local broadcasters and local viewers.

Yes. And then, Dan, to address the second part of the question on the cost structure. Let me first say that the team has done a fantastic job so far even before me getting here just working on the cost and making sure that we are very, very prudent in our investments and continue to realize returns on those investments. And this would not be an exaggeration. If I said we have one of the best teams here. Having said that, continue to have conversations across different functional areas since my arrival here. And I think people are happy to have those conversations with me. They're having those conversations with open mind. And we're looking at all of the different options in front of us to see how best we can continue to go to market in terms of what we have in our top line. Those conversations are continuing. We are in the middle of our business planning exercise, budgeting exercise and I think we'll have more to share, maybe a more fulsome update to share in our fourth quarter call in February. But rest assured, its team is fully engaged, and we're working through that.

Our next question is coming from Aaron Watts with Deutsche Bank.

I've got two, if I could. The first, I'm hoping you could talk a bit more about the core advertising environment for your local stations. It looks like it was down around 5% in the third quarter, but has the potential to be up in 4Q. Aside from the crowd-out in the prior year, what driving that improvement sequentially, whether that's select categories or other items? And any early thoughts on what that signals for station core ads in the new year?

Yes. So with our categories, all key categories are either up or flat versus a year ago, and it's sequential improvement from third quarter. And we started seeing that outcome about in September. And I think you can attribute it to the growth and you're seeing higher ratings across all live sports, the World Series just had a record viewership for Game 7 with $25 million. The Chief Bills game that just happened last weekend, it was the second highest [indiscernible] game in the year and there's a big appetite from the advertising community to buy into live sports. And it always helps as the network sell-out early with double-digit CPM growth and the local broadcasters are benefiting from the sellout in the network and that need both locally and with national advertisers buying into live sports.

So look, I'll just add on to that. But obviously, what we saw late in Q3 and should be helping Q4 is a listing of the uncertainty around the economic situation that was first sparked by tariffs. And so that's definitely helping us pick up pace. And as you saw in our prepared remarks, we're expecting core to be up 10%, and we're also expecting 2026 to be a positive growth year.

Okay. That's helpful. And then if I could, one more. There have been reports that the NFL may look to open up negotiations on its media rights early. Extending the runway with the most popular content on TV seems like a clear positive, but we've also heard concerns around that, including the potential for increased rights payments, digital outlets taking more games, the risk of a broadcast network, maybe being left out, et cetera. Curious if you view that potential early opening of the rights as a positive or a negative development for you and the TV broadcast universe?

So while we can't predict exactly the outcome. I think from our perspective, it's an early renewal when I weigh all the potential puts and takes is undoubtedly a positive. One of the biggest questions we get from investors is what happens when the NFL rights expire or the outcomes around for some of these deals. And what's being discussed are significant extensions of the rights into the back half of the 2030s, which would give the industry a lot of certainty. And I think that would be very positive for the industry. And having a renewal this early ahead of the potential expirations, I think also is to the advantage of the incumbents who have the existing rights because they'll have so much term left on their existing deals.

So it's hard to imagine an early renewal where an existing broadcaster gets left out. I think what's more likely to happen is that a new package gets created. So one thing that's been speculated on, which I think makes a lot of sense is a 09:00 a.m. window opens up. And international games are played every week as you saw a lot more this year. And that international game could be sold as a separate package, to a streamer, for instance. And that would increase the total take for the NFL. And then in terms -- and so I think if that was the outcome, and there was maybe 1 less gain in the in the regional packages with Fox and CBS, I think that's a perfectly fine outcome for the broadcasters.

And I think it just would be very politically challenging, not only from a Washington, D.C. perspective, but also from a reach perspective, NFL were to actually move wholesale away broadcast. So I think you add all that up and a scenario like I just outlined is probably the most likely outcome of an early renewal, which I think is a very big positive for the industry. And in terms of paying more, we'll have to see how that process rolls out. All of the media companies are currently monetizing their NFL content in both broadcasting and streaming.

And I think one of the strongest arguments we have on our side in any of those discussions on programming is that they're still a very lopsided contribution for paying for that programming on the streaming side. So to the extent that you're monetizing in both, which everyone now is, the burden of the increased costs will have to be borne by streaming and not by broadcast. And we saw that play out in our last renewal with NBC, where we did not pay more because the [ NBA ] came to NBC. And we think that was the right outcome, but we're very happy to have the NBA. So I think you add up all those dynamics, we'd be very appreciative of an early renewal.

I think when you also look at this is the NBA returning to over-the-air blocks in this year or at the full year next year. If you believe there are rumors, which I actually believe the rumors that MLB is coming back to NBC as well off of the cable channels that there is this rebirth because of the reach of over-the-air and not having to pay and not having to use passwords that it is the most attractive place to drive it, and you're seeing record ratings and don't forget that the college football championship will be coming back to over the air on NBC in 2027. So all points showcase from here forward is that over the areas of the place that these major sports are coming back to.

Our next question is coming from Steven Cahall with Wells Fargo.

Chris, we've talked about your vision for some of the remaining more levered broadcasters to consolidate. And I know you think there's meaningful synergies there. So what needs to happen for those discussions to kind of move aggressively if they haven't already. I think there's some control issues there that maybe could be sticking points. So what do you see as the biggest obstacles to getting 1 or 2 of those parties into a transaction that's to everyone's benefit.

And then do you need a transaction in order to separate local from Ventures? Or do you think that those 2 businesses are in financially appropriate places for the separation to proceed regardless of whatever else might happen with consolidation on the local side.

Sure. So look, there are precedent setting transactions that are currently being processed through both the SEC and antitrust DOJ. So I do think getting a positive outcome there, which is what I fully expect will happen, will be very helpful in moving the broader consolidation along. I do think, generally speaking, volumes will pick up when those precedents are set because it derisks any future transactions for others. And so that's 1 element.

You did note of the remaining public broadcasters are all control companies. So certainly, there are social control issues to be figured out as well. In terms of our strategic review and the separation of Ventures, our ideal process would be to do a simultaneous merge and spin. But we certainly don't view that as an absolute requirement. And just by our math, just to spin alone would unlock over $1 billion of value. So it's well worth doing absent the merger, but a merger and to spin together create the maximum value. So that is our first choice.

And then just a follow-up for Narinder on the 2026 core outlook. I think core was down about 5% in 2022 in the last midterm. And it looks like you expect -- we all expect this midterm to probably be better than 2022. So can we kind of infer that the incremental sports returning are kind of making up for the 5% that core might have been down in the last midterm to get you to your guide for '26?

Yes. I think that's the right way to think about it, Steve. Obviously, we expect 2026 to be a record political year. And so the offset there is 2 parts. One is obviously sports returning. But that has to be combined with execution on our part, it has to be combined with how our customers are going and purchasing these ad slots. And I think our team has done a phenomenal job so far in addressing those things. And I think that's driving our outlook for 2026.

I would also say that our ecosystem of assets to offer the advertising community has grown substantially from '22 to '26 and in a cross-platform buying ecosystem in 2026, it's much more advanced than 2022. And we spent the last several years building out a complete different asset portfolio. So we have a holistic cross-platform offerings that are going out to our advertisers as well. So it's not one conventional.

Our next question is coming from Ben Soff with Deutsche Bank.

I appreciate the color on renewals and potentially the ability to improve reverse comp in your negotiations next year. Any sense for how to think about the outlook for net retrans into 2026 and beyond? And then I have a follow-up.

So as we mentioned, next in 2026, we were expecting sort of flattish gross retrans because we don't have any meaningful renewals. We are in the process of reviewing how we give guidance, and we're going to have more to update you on when we announce Q4 in February. [ On that ] Ben, but that's, I think, all we can say for now.

Okay. And then just to clarify, the $30 million run rate EBITDA from the partner transactions, how much of that contributed in 3Q? How much is in the 4Q guide, if any?

Yes, on that. So I think you're referring to the partner station buy-ins. So on that, what you had in Q3 was fairly immaterial. It was very, very immaterial, had no impact on Q3. For Q4, there is going to be some contribution there. But again, it's not material either and not -- and that's not driving our Q4 guide. There is going to be some contribution, but it's going to be deminimus.

Thank you. Ladies and gentlemen, as we have no further questions in the queue at this time, I would like to turn the call back over to Mr. Riley for any closing comments.

Thank you, operator, and thank you all for joining Sinclair's Third Quarter 2025 Earnings Call. To the extent you have any questions or comments, please feel free to reach out to us.

Thank you. Ladies and gentlemen, this does conclude today's call. You may disconnect your lines at this time, and we thank you for your participation.