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

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 were 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 the 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 Four 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 three primary sources: distribution revenue optimization, corporate overhead rationalization, and the creation of multi-station markets where permitted. One potential path for industry evolution could involve consolidating into two similarly sized scale broadcast groups, creating another group comparable in size to the large broadcast combination announced in August, which could unlock an estimated $600 million to $900 million in annual synergies through mergers and subsequent portfolio optimizations. This level of consolidation would strengthen 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 EdgeBeam before we turn it over to Narinder to review the 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 Rulemaking 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 stations to sunset their ATSC 1.0 signals which will open significant spectrum capacity to drive improved video offerings and data casting use cases that EdgeBeam 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 EdgeBeam, our joint venture with our broadcast peers, CEO Conrad Clemson, 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 5.125% 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 practicable 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 toward 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, 22% above the midpoint of our guidance range. Capital 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 examine 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 as the NFL and college football returned 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 introduce 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 light 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 political advertising 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 suggests 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 remain well positioned given our strong ratings and broadcast advertising's proven effectiveness. We anticipate meaningful ratings 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 three 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 quarterly 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. This 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' Principal, 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 high 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 industry. Thank you for joining us today. Rob, Narinder and I are now happy to take your questions.

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

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 MVPD universe? And then one for Narinder, now that you finally had a little bit of time to get your hands behind the wheel here, it 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 you think you have to chop here from an efficiency standpoint?

Thanks, Dan. YouTube has clearly become a major force in the industry. As you may recall, we faced some disappointment with distribution last quarter. We expect that situation to improve in the fourth quarter, as there is usually a delay. The return of viewers for football will start to benefit us near the end of the fourth quarter. Additionally, we’ve discussed at length YouTube and other virtual platforms. Currently, there is a blackout between Disney and YouTube TV, which has left us and many others caught in the dispute between Disney ABC and YouTube TV. Essentially, we have two media giants, Disney and Google, involved. This situation with virtual MVPDs is relatively new, and as local broadcasters, we have no control over whether our content, which we pay to air, will reach local viewers. This does not align with the intent of the Communications Act and raises antitrust concerns from our standpoint. Disputes like this continue to negatively impact local viewers and local journalism. Many broadcasters, including us, have discussed these issues with the SEC and antitrust regulators, and we believe this practice needs to be addressed. Disney, ABC, and other networks should not have the power to control our ability to distribute content on YouTube TV or other platforms like Hulu and Fubo, which are also owned by Disney. The FCC has initiated an investigation into harmful network affiliation practices, and we see these detrimental practices affecting viewers as they miss out on local news and sports. It is particularly troubling that consumers are now compelled to purchase additional streaming services from one party in the dispute to access content they have already paid for. We urge Congress, the FCC, and antitrust regulators to further investigate this matter and protect local broadcasters and viewers.

Yes. And Dan, to address the second part of the question on the cost structure. Let me first say that the team here has done a fantastic job so far even before my arrival on 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 an 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, the team is fully engaged, and we are 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's 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 help come about in September. And I think you can attribute it to the growth that you see higher ratings across all live sports. The World Series just had a record viewership for Game 7 with $25 million. The Chiefs-Bills game that just happened last weekend was the second highest viewed game of 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 up 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 would just add on to that, that obviously, what we saw late in Q3 and should be helping Q4 is a lifting 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 Q4 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, etc. 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.

While we can't predict the exact outcome, from our perspective, this early renewal is clearly a positive when considering all the factors involved. A major concern for investors is what will happen when the NFL rights expire and the implications of some of these deals. Currently, there are discussions about significant extensions of the rights into the latter part of the 2030s, which would provide the industry with much-needed certainty. This early renewal is advantageous for existing broadcasters since they would still have substantial terms left on their current deals. It's difficult to envision a scenario where an early renewal excludes an incumbent broadcaster. Instead, it’s more plausible that a new package will be formed. One possibility being discussed is the 9:00 a.m. time slot opening up for international games, which could be sold separately to a streaming service, ultimately increasing the total revenue for the NFL. If that were to occur and one game was removed from the regional packages with Fox and CBS, it would still be an acceptable outcome for the broadcasters. However, the NFL moving entirely away from broadcast would be politically difficult, both from a regulatory standpoint and in terms of audience reach. Putting all these factors together, the scenario I described seems to be the most likely outcome of an early renewal, which would be very beneficial for the industry. Regarding the potential for increased payments, we will need to see how that process unfolds. Media companies are currently capitalizing on their NFL content through both broadcasting and streaming. One strong argument in these discussions is that there is a significant imbalance regarding payment for programming on the streaming end. As everyone is now monetizing in both areas, the increased costs will likely fall on streaming rather than broadcast. We experienced this with our last renewal with NBC, where we didn't incur higher costs because the NBA also came to NBC. We believe that was the right outcome, and we're pleased to have the NBA. Considering all these dynamics, we would be very grateful for an early renewal.

I think when you also look at this is the NBA returning to over-the-air broadcasting this year, we'll have a full year next year. If you believe the 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 ABC in 2027. So all points showcase from here forward is that over-the-air is 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 one or two 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 two 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 FCC 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 one element. You did note of the remaining public broadcasters, they're 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 the spin alone would unlock over $1 billion of value. So it's well worth doing absent a merger, but a merger and a spin together create the maximum value. So that is our first choice.

I have a follow-up question for Narinder regarding the 2026 core outlook. Core was down about 5% in 2022 during the last midterm. It seems we all expect this midterm to likely perform better than in 2022. Can we assume that the additional sports returning are helping to compensate for the 5% decline in core from the last midterm, which aligns with your guidance for 2026?

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 two parts. One is obviously sports returning. But that has to be combined with execution on our part, 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 holistic cross-platform offerings that are going after our advertisers as well. So it's not one-dimensional.

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're 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, in 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, I believe you are asking about the partner station buy-ins. In Q3, that aspect was quite insignificant and did not affect our results. Looking ahead to Q4, there will be some minor contributions, but they remain not substantial and are not influencing our guidance for Q4. The contributions will be minimal.

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. Ripley 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.