Good afternoon, everyone, and welcome to the Sinclair Broadcast Group's Second Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode and we will open for questions following the presentation. Please note, this conference is being recorded. I will now turn the conference over to your host, Chris King, Vice President of Investor Relations. Chris, the floor is yours.

Thank you. Good afternoon, everyone, and thank you for joining Sinclair's second quarter 2024 earnings conference call. Joining me on the call today are Chris Ripley, our President and Chief Executive Officer; Lucy Rutishauser, 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 & Presentation page of the Investor Relations portion of the site. A webcast replay will remain available on our website until our next quarterly earnings release. Certain matters discussed on this call may include forward-looking statements regarding, among other things, future operating results. Such statements are subject to a number of risks and uncertainties. Actual results in the future could differ from those described in the forward-looking statements as a result of various important factors. Such factors have been set forth in the company's most recent reports as filed with the SEC and included in our second 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. Finally, we note the presentation of certain information in our second quarter earnings release and slides may have changed from prior quarters due to the completion of a routine common process with the SEC that we believe other publicly traded broadcasters were recently engaged in as well. For example, we have changed the definition of adjusted EBITDA to be based on programming amortization rather than programming payments, which had a positive $2 million impact to adjusted EBITDA during the second quarter, and we have also eliminated adjusted free cash flow from our financial presentations. If you have any questions regarding these changes, please feel free to contact me directly. Let me now turn the call over to Chris Ripley.

Good afternoon, everyone, and thank you for joining us. I'll start on Slide 3 by highlighting our second quarter financial results on a consolidated basis. We delivered strong second quarter results that met our revenue expectations across all major line items. Total distribution and advertising revenue were both in line with our guidance ranges, which contributed to an inline performance in total media revenues during the second quarter, while favorable expenses resulted in adjusted EBITDA exceeding our high end of our guidance range. Lucy will go into more details in a moment. On Slide 4, our ventures portfolio received $109 million total distributions during the quarter, including $105 million of exits. Net of $26 million in contributions, we received $83 million of cash from our minority investment portfolio in the quarter. At quarter-end, Ventures held $326 million in cash, which reflects the $98 million Ventures contributed to our Diamond solvent payment in April. Turning to Slide 5. I wanted to take a minute to provide an overview of our local media broadcast assets and their value proposition, which tends to get overlooked in the broader media landscape. Sinclair is one of the largest and most diversified television broadcasters with national reach. As you can see, we have a well-diversified portfolio of assets by network affiliate mix, geographic location, and by asset type, with 183 owned and operated stations covering over 38% of US television households today or 24% based on the UHF discount. We're in 86 markets across the country with no single market representing more than 5% of our total advertising revenues. More than 50% of our news operations ranked number one or number two, which de-risk us more broadly. Let me now turn the call over to Rob Weisbord to go into some additional details on our local broadcast assets as well as an update on our political expectations for the year.

Thanks, Chris. On Slide 6, I want to remind the investment community of some of the unique and value-driven characteristics of broadcast television. Our sector has been impacted in recent years by fears of cord-cutting trends. First, it's important to remember that broadcast TV has the highest reach of any communications platform in the country today, with 80% of adults 18 years of age or older spending time with broadcast television on any given day. How much time? Close to 4 hours per day for the average American adult. No other mass market communications medium comes close to matching broadcast reach and viewership. Why is that? Let's take a look at a couple of differentiated programming assets. One of the most important assets broadcast TV has as an industry are live sports programming assets, which drive the highest viewing audiences of the year. As we noted last quarter, 97 of the top 100 most watched telecast in 2023 were on broadcast TV, with the other three being College Football Playoff games. 96 of the top 100 most watched telecast were sports programming content, with the National Football League contributing 93 of the top 100. In addition, while much has been made about additional sports content heading to streaming platforms, we also see a large amount of sports content coming back to broadcast television. Notably, the College Football Championship game is moving from ESPN to ABC beginning with the 2026-'27 season. Also, the NBA now has two broadcast network television partners for its upcoming rights deal, which begins in October of 2025. In addition, we have several professional franchises beginning to shift more and more of their on-air games to local broadcast stations and away from cable and regional networks. We continue to expect to see strong sports ratings from the biggest events of the year as evidenced by the Paris Summer Olympics ratings on NBC, which are up almost 80% over the 2021 games. As you can see on Slide 7, every one of these sports leagues has the broadcast networks at the heart of their licensing rights, with most of those rights agreements in place for an extended period of time, with the earliest renewal not coming until after the quadrennial FIFA World Cup in 2026. More importantly, the National Football League's current rights agreements last for another 10 years. With limited exposure to near-term league renewals across the sports landscape, we continue to expect sports programming to be an important driver of broadcast value proposition to our viewers for many years to come. Turning to Slide 8, I want to do a deeper dive into another key driver of our viewership trends, local news. In this divisive election year, public trust is crucial for any news organization. Reuters recently conducted a large study in US news organizations and found local television news was the most trusted source of information, with 62% of adults trusting their local television news. This is nearly doubled overall trust in the news in the US. In addition, on a weekly basis, adults interact the most with local television news, leading all other news organizations, with most of those views tuning in more than three days a week. On Slide 9, another recent viewership study highlighted that local news attracts a highly sought-after politically-balanced audience, particularly when compared to cable news networks. We see this as crucial, especially in an election year when campaigns look to target more independents, moderates, and swing voters, particularly in the swing states where we have stations with local news. And you can see that in Sinclair markets, the local news audience meets advertisers' needs by delivering the most politically-balanced audience compared to the major news networks. All of which leads to Slide 10, where you can see the strong growth in political advertising over the last 10 years, regardless of Presidential and Midterm election years. And we are confident this year will continue that trend and be another record political year for us. In fact, as of August 1, we had $146 million in political advertising booked for the second half of the year, which is almost double the amount we had booked on the same date in 2020. Third-party studies have pointed to estimates as high as over $12 billion for total political ad spend this year, which will represent an increase of 29% over 2020 levels, with a significant portion of that amount going to broadcast TV. And when you consider that we are in hotly-contested markets across the country, over half our news content centers are ranked either number one or number two in their market. The large number of down-ballot issues this year, the late changes on the Democratic Party presidential ticket, and the assassination attempt on former President Trump, then you have what we expect to be the makings of another record political spending year. Taking those drivers into consideration, we are providing our full year political revenue guidance of $385 million to $410 million, a 10% to 17% increase over 2020's pre-Georgia runoff amount of $350 million. Let me now turn the call over to Lucy to provide a more granular update on our financial results and balance sheet.

Thank you, Rob. As Chris King mentioned at the start of the call, based on our recent SEC routine comment letter process, several non-GAAP items have changed. Adjusted EBITDA is now calculated, deducting program amortization rather than program payments, which during the second quarter increased our Local Media and consolidated adjusted EBITDA by approximately $2 million for both actuals and guidance. In addition, we will no longer be discussing adjusted free cash flow, but have provided the same component line items that we have reported historically. Turning to Slide 11, as Chris touched on earlier, we are pleased with our strong performance during the second quarter, with revenues in line and adjusted EBITDA above guidance on a consolidated basis. Total advertising revenues were up 11% year-over-year, driven by $40 million in political revenues, which easily exceeded our expectations. Distribution revenues were up 4% year-over-year, driven by renewal rate step-ups and new carriage agreements on Tennis Channel over the past year, partially offset by distributor subscriber churn. Adjusted EBITDA exceeded the high end of our guidance, driven by media revenues and our continued laser-focus on driving down costs and increasing efficiencies throughout the business. And CapEx was favorable to guidance, primarily on a large facility buildout coming in below estimates. As noted earlier, we also received $109 million in Ventures distributions. Turning to Slide 12, consolidated media revenues of $819 million were up 7% in the quarter on the higher political revenue as well as distribution revenues on recent renewals and added carriage, which exceeded subscriber churn impacts. As compared to guidance, the strong political revenues offset modest weakness in core advertising while distribution revenues were in line with our expectations. On Slide 13, adjusted EBITDA was $158 million, which exceeded the high end of our guidance range. Consolidated media revenues were in line to guidance, and media expenses came in approximately $15 million lower than our expectations on a combination of both timing and permanent savings, with approximately $4 million of the expense reduction attributable to timing and $11 million in permanent savings across a variety of departments and expense lines. As compared to last year, pro forma adjusted EBITDA increased by 39%, driven by the stronger political and distribution revenues and modestly lower corporate overhead, which offset in part by higher network fees and sales costs on the higher revenue. Turning to Slide 14. For the Local Media segment, we delivered solid second quarter results that met our guidance expectations, with adjusted EBITDA coming in close to the high end of our guidance range. Within Local Media, distribution revenue was at the midpoint of guidance and total advertising revenue in line on stronger-than-expected political revenues. Although core advertising came in under guidance, political revenue of $40 million easily exceeded the high end of our expectations for the quarter. So, to summarize, our Local Media segment had a solid quarter, achieving both total media revenue and adjusted EBITDA guidance. Tennis Channel also had a strong quarter, with media revenues up 12% year-over-year on distribution revenues, which grew 11% on renewals and added distribution carriage over the past year. Advertising revenues were flat over the prior year and were modestly softer than expected. Tennis Channel's adjusted EBITDA was slightly above our guidance, with expenses coming in favorable in part due to timing of promotional expenses that are expected to occur in the second half of the year. It is important to note that Tennis Channel's $7 million of adjusted EBITDA includes approximately $6 million of operating losses associated with future growth initiatives. Turning to our balance sheet metrics on Slide 15. You can see our debt maturity stack profile with our next meaningful maturity two years in the future in September 2026. Sinclair Television Group's first-lien net leverage was 4.5 times and total net leverage 5.6 times at the end of the quarter on a trailing eight-quarter basis. Interest coverage was 2.8 times as of June 30. Our consolidated cash position was $378 million at quarter-end, with $52 million at SBG and $326 million at Ventures. Including our undrawn revolving commitments, total liquidity was $605 million. There were 66 million total shares outstanding at quarter-end. Slide 16 introduces our third-quarter guidance. We are guiding for consolidated media revenues to be in the range of $898 million to $929 million, up 17% to 21% versus the year-ago quarter, which is largely driven by political advertising growth. However, we expect core advertising to grow 3% to 7% and distribution revenue to be up 5% year-over-year. Adjusted EBITDA is expected to be $229 million to $254 million, up 58% to 75% over the year-ago levels. Our full-year 2024 media expense guidance on Slide 17 reflects a modest 5% increase over 2023, which includes the higher sales cost associated with the revenue growth and the cost for the various initiatives taking place, such as our move to the cloud and Tennis Channel's direct-to-consumer launch and international expansion to name just a few. As compared to our prior guidance, media expenses are now $7 million lower at the midpoint. In addition, non-media expense and net interest expense are each expected to be $4 million lower than our prior guidance level. And we expect capital expenditures to now be within a range of $93 million to $98 million, a reduction of $12 million from our prior guidance. Approximately $2 million of that decline is timing of projects expected to hit in 2025 and $10 million is from permanent savings, primarily a large building project that came in under plan as well as lower routine CapEx. In addition, our full-year net cash tax payment guidance has been lowered by approximately $162 million, which is timing and expected to be paid in the second quarter of 2025 due to the delay in the Diamond Sports bankruptcy process. And finally, note the $106 million increase in cash distributions from Ventures equity investments, which includes the $105 million received during the second quarter. In terms of political revenues, we are increasing our full-year expectations given the strong results seen in the first half of the year as well as the dynamic shaping up in the presidential race. Our full-year political revenue expectation is for $385 million to $410 million, which is an increase from our previous guidance of at least $350 million. As you can see, we are bullish on the political spending environment in general as well as our geographic positioning in swing states and politically attractive news audiences. With that, I'd like to turn the call back over to Chris for some closing comments.

Thank you, Lucy. Turning to our key takeaways on Slide 18. Sinclair delivered solid second-quarter results with adjusted EBITDA exceeding the high end of our quarterly guidance range. Total advertising revenue was up 11% year-over-year, distribution revenues were up 4% year-over-year, and core advertising trends remain solid. With approximately 60% of our big four subscribers still to be renewed, our two-year CAGR for net retrans remains forecasted at mid-single digit percentage growth. Political advertising revenue is on track for our largest year ever, which estimate would be 10% to 17% growth over the 2020 Presidential election year excluding the Georgia runoff. In addition, we also received $105 million in cash proceeds related to the exit of a significant investment within our Venture investment portfolio during the quarter. As we head into the second half of the year, we have momentum on our side and multiple drivers for cash flow generation. Lucy, Rob, and I will now open up the call to questions. Thank you for joining us today.

Thank you very much. We will now be opening the floor for questions. Your first question is coming from Dan Kurnos of The Benchmark Company. Dan, your line is live.

Great. Thanks. Good afternoon. Maybe just start with, Chris, just on Ventures. Appreciate the update on the distribution. Just love some more color on kind of the progress you're making towards some of the initiatives you talked about, whether consolidating investments or kind of rebuilding the Ventures in the way that you see it going forward? Thanks.

Thanks, Dan. So, as you saw, we had a very significant exit in Q2 that generated $105 million. So, we're very pleased with that. We've got other monetization opportunities in the queue. I think we've done an excellent job so far of picking our spots and, by the way, exiting with great returns. That exit had around a 40% IRR we had in Q2. And so, we're very focused on monetization and turning more of that portfolio into cash, of which we now are sitting on about $330 million in Ventures. We are looking at opportunities for reinvestment into consolidated opportunities in areas that are fragmented marketplaces that have high-growth opportunities. But we're being very disciplined in terms of our selection and our criteria. So, we are not in a rush. We're looking for the right areas, and in the meantime, there is a bit of emphasis on monetization, as you can see.

Got it. And then just on distribution, just maybe a housekeeping. The timing of the 60% that's left, is that like later in Q3? I mean, we kind of have an idea of what's up, but just any kind of help around the timing of when that hits?

Yeah. So, look, most of the remainder of our distribution deals will come up in the next several months.

Okay. I'll follow up on that, but regarding core performance, the guidance for Q3 is quite impressive considering the political crowd-out. We've heard reports of some weakness from others in Q2, but for Q3 to increase guidance despite that crowd-out is noteworthy, and I would appreciate more details or insights on the strength in Q3 related to core performance.

The first thing to mention is the AI pricing algorithm system we've implemented, which allows us to anticipate demand and adjust pricing accordingly. This strategy minimizes crowd out and pre-emptions, helping us to strengthen our core business. We're seeing a positive trend in the automotive sector for Q3 and Q4. While tier 3 auto faced challenges in the first half of the year due to high interest rates and rising sticker prices, dealers at the local level are now focused on clearing out the 2024 models to make space for the 2025s, and we are considering rebates. As a result, we expect the automotive sector to remain positive, maintaining its performance throughout the year. Additionally, we have concentrated on the home services category, where we've observed mid-teen growth. We're also encouraged by the fact that no category saw significant declines in the second quarter; they all remained relatively stable, with the exception of pharma, which we anticipate will rebound in the latter half of the year.

And I'll just add to that that this has been a multi-year effort around transforming our sellers into true marketing consultants and focusing on share of wallet, not just share of spot sales. And we're really seeing the fruits of that labor of our multiple years of upgrading the tools that they use, the products that they sell, and that's contributing to the overall revenue momentum that we're seeing.

And just one last thing is as we get into the podcast/audio business, we had a very strong upfront for two national shows. They spoke a little bit about Urban Meyer, Mark Ingram and Rob Stone hosting the show, as well as Jerry Ferrara, best known as Turtle and Entourage, and Matt Leinart, former Heisman winner. And so, we're really, really optimistic based on the upfront sales that we're headed in the right direction. So, as we diversify into more and more into our cross-platform media company, we're seeing a lot of success.

That's super helpful, guys. Really appreciate the color. Thank you.

Thanks, Dan.

Thank you very much. Your next question is coming from Benjamin Soff of Deutsche Bank. Benjamin, your line is live.

Hey, everyone. Good afternoon. Thanks for the question. I wanted to follow-up on the core advertising performance. And in particular, did you see any impact this quarter from the auto hack (ph)? And did that maybe push anything into Q3? And then, I just wanted to double click on the better-than-expected operating expenses. Is there any color you can add on sort of the initiatives you're working on and the strength you're seeing in margins there? Thank you.

Yes. With regards to auto, we were down low-single digits, so not a major impact. We have a big effort on auto with the auto division inside Sinclair. So, we're able to do cross-platform solutions with our auto group, and we've made our sellers out in our local marketplaces automotive experts as well. So, it helps minimize some of the weakness from just plain traditional advertising. So, we're comfortable in the direction we've built this business, and it helps mitigate some of the softness that you might be seeing. And I do think it's fair to say that the hack that happened did have an impact on Q2, and we're definitely seeing more strength in Q3.

I appreciate your question about expenses. You're right that our expenses have decreased as we progressed through the year. As mentioned earlier, we are focused on controlling costs and increasing efficiencies to work smarter and reduce waste in our processes, and you're starting to see the impact of these efforts. Regarding our initiatives, we have the cloud project, our tennis series targeting direct-to-consumer, international efforts, and pickleball, as well as fast channels. Specifically for the cloud project, while we will be investing in it over the next couple of years as we transition all of our stations, we've already realized operational expense savings of about $3 million to $4 million in 2024, along with capital expenditure cost avoidance of just over $7 million. This illustrates what we mean when we refer to these as growth or return-generating initiatives for the future.

Okay, great. That's super helpful, guys. Thank you.

Thank you very much. Your next question is coming from Avi Steiner of JPMorgan. Avi, your line is live.

Thank you very much for the questions. I've got a couple here. Just one, if we could talk about core? Is that range you gave solely for the local TV group, or is there some at the other assets? And then, while we're talking about core, what are you guys seeing from the consumer perhaps in your markets, small, medium-sized businesses, given all the noise economically out there? And then, I've got a couple of follow-ups. Thank you.

For the core, we expect to remain in the range of 3% to 7%, whether it's for the total consolidated company or for the local media.

I'll let Rob share more about the consumer trends and category insights he's observing, but so far, we're not experiencing a significant impact on our advertising revenues. Looking at our performance this year, we anticipate the strongest core growth in Q3 compared to Q1 and Q2. While there are valid concerns regarding a slowdown in consumer spending, I believe much of it is just speculation at this point. Up to now, we haven't seen this slowdown reflected in our performance, but I'll hand it over to Rob for his perspective.

Yeah. I think that when you see one of our top categories in home services having mid-teen growth is where you have high interest rates that might slow down. But again, with automotive, they're going to have to unload those '24s. Obviously, we're not seeing as many homes sold, but we're capitalizing on the fact that people are improving their own properties and doing upgrades to their homes. And then, on a continued advertising basis, we have from large solutions to smaller solutions to keep those advertisers continuing to advertise despite what the economy is.

Appreciate that. And then just if I can turn sort of the balance sheet here, so you had this nice exit at Ventures. I think you had mentioned there are some other potential exits in the hopper. I don't know if you can size that roughly. And then, how do you think about the enhanced liquidity overall at that entity in the context of your debt maturities at the television entity? Thank you.

We are not ready to provide specific guidance on exits. The nature of these activities is somewhat irregular and unpredictable, based on whether transactions will occur. However, we do have more opportunities in progress and plans for nearly every asset in that portfolio, including when we believe it’s the right time to monetize them. You can expect a somewhat steady flow as we have many assets involved. Monetization is a priority, particularly for our minority portfolio, which we feel isn't receiving adequate recognition from Wall Street. We are being very cautious in exploring new reinvestment opportunities. Regarding resource allocation between the two credit stacks, we believe they should be self-sufficient, and while it is possible to use resources across them, we do not anticipate needing to do so.

Appreciate the time as always. Thank you.

Thank you very much. Your next question is coming from David Hamburger of Morgan Stanley. David, your line is live.

Hi, thanks. If I could, just a couple as well. Maybe on the distribution revenue growth guidance, first, can you give us a churn, what you're seeing in churn of subscribers? And then, in the guidance, I was curious the 60% that you have coming up for renewals, a couple of large distributors that have been somewhat aggressive in the past with some of your peers in renewals, one of them has actually even dropped a couple of your peers during the negotiation process. So, I'm just wondering if you could give us a little color on how you're so confident that you're going to get mid-single digit CAGR growth over the next two years? And then maybe even if we could step back a second, what's your expectation after the next couple of years for some of the distribution revenue trends, maybe just from a kind of high-level perspective?

Churn remains in the mid-single digits overall. For the summer and specifically Q3, there is some seasonality in virtual MVPDs as we go from the end of the second quarter into Q3 before the football season begins. Virtual MVPDs typically see slow net additions until football starts, at which point they pick up significantly. Regarding future negotiations, we cannot disclose anything about them; however, we have successfully completed many renewals this year with both large and small MVPDs, all of which have met or exceeded our expectations. Our confidence stems from recent successful negotiations without any blackouts so far. While we would consider a blackout if fair compensation isn’t received for our offerings, everything has gone smoothly up to this point. This gives us a strong outlook on the market and the confidence to provide our guidance. Looking ahead, once we complete this year, we won’t have major negotiations for some time, making it uncertain what the market will look like in the future. We expect to maintain great certainty for several years. The current landscape suggests that the value proposition of broadcasting within the Pay TV universe is increasing, and I believe this positive trend will continue into the next cycle, although this is beyond any specific guidance we can provide.

And maybe just a follow-up on the sports question. I mean, you mentioned the NBA. I think NBC has said they plan to exclusively stream half of their regular season games on Peacock. Now, we've heard that the NFL is doing two Christmas games on Netflix. Amazon, next year will have a wild card game similar to what Peacock did last year. What are your thoughts about simulcasting exclusivity of more and more sports programming, which seems to be the case, although you do mention there are instances obviously of some sports coming back to broadcast, but it seems like a fairly splintered or more fragmented distribution strategy going forward? Maybe again, just from a strategic perspective, can you talk a little bit about some of these recent developments in streaming of sports?

I believe we are actually more optimistic about the NBA. Based on our discussions and observations, it seems that after the NFL season, there will be Sunday and Tuesday Prime programs on the network, while Monday games will stream on Peacock. We operate in a world where both formats coexist, and even during simulcasts, the strength of broadcast remains evident. For instance, the local ratings for Amazon's Thursday games demonstrate this. This has become the new norm. Nevertheless, when you consider the audience reach and the viewership for the Paris Olympics, it is clear that traditional broadcast networks still have unmatched reach at this time.

Another great example is the past Super Bowl made new records about 120 million viewers on broadcast. And now when you take a look at all the other places that it existed, it was a pittance in terms of what it added to the overall viewership.

When you look at just the announcement today in New Orleans, the NBA basketball team Pelicans went back to broadcast television. So, you're seeing this more and more as a prevalence to be able to get the greatest reach the teams in the various leagues are recognizing that they need to be on free over-the-air broadcast.

Okay. Thank you very much.

Thank you.

Thank you very much. We appear to have reached the end of our question-and-answer session. So, I will now turn the call back over to Chris Ripley, the President and CEO, for closing remarks.

Thank you, operator, and thank you all for joining our second quarter earnings call. To the extent you have any questions or follow-ups, please do not hesitate to reach out to us. Thanks.

Thank you very much. This does conclude today's conference call. You may disconnect your lines at this time and have a wonderful rest of the day. Thank you for your participation.