Sinclair, Inc. Q4 FY2025 Earnings Call

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 & 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. I would like to start on Slide 3 by discussing our achievements in 2025. This year was marked by disciplined execution, significant simplification of our portfolio, and a strategic positioning of the company for stronger performance in 2026 and beyond. Firstly, we reported strong financial results, with total revenue of $3.2 billion and adjusted EBITDA of $483 million, both exceeding our guidance midpoint. In the fourth quarter, we achieved total revenue of $836 million and adjusted EBITDA of $168 million. Notably, we observed positive trends in our core advertising business, with a 14% year-over-year growth in core advertising during the fourth quarter, and early signs of churn stabilization among key MVPD partners. This progress is a result of improved operational execution and the strength of our local content portfolio. In Ventures, the portfolio yielded $104 million in cash distributions over the year, and we concluded 2025 with $465 million in cash at Ventures, providing us with liquidity as we advance our Ventures separation planning. Beyond financial performance, we made concrete steps to enhance our portfolio. We are reviewing our broadcast business strategically to maximize long-term shareholder value, while also preparing for the potential separation of Ventures. We continue to expect around $30 million in annualized run rate synergies by the second half of 2026 from the JSA and LMA buy-ins, which will reinforce the long-term earnings potential of the core business. So far, we have successfully closed on 15 partner station acquisitions, expecting most of our optimization process to be completed by midyear. Furthermore, we have strengthened our balance sheet and set a pathway for deleveraging. Throughout the year, we executed a comprehensive debt refinancing in February, paid off our final $89 million of 2027 notes in October, and set up a $375 million accounts receivable facility in November. Consequently, our closest debt maturity is now in December 2029. At the end of the year, our total debt stood at $4.4 billion, our total liquidity was approximately $1.5 billion, and we had total cash of $866 million. Deleveraging remains our top priority, and we anticipate cash generation from 2026 to 2028 will assist us in that goal. Together, these factors indicate that 2025 was a year of strong execution and structural progress, positioning Sinclair for improved flexibility, enhanced focus, and a solid foundation as we enter 2026. Moving to Slide 4, I would like to update you on the current regulatory landscape. The industry is awaiting several significant decisions currently before the Federal Communications Commission. Meanwhile, the broader environment remains favorable for local broadcasters, and we are optimistic about key issues’ direction. Regarding ownership, FCC Chairman Carr has consistently shown support for modernizing what many consider to be outdated national ownership rules. President Trump also voiced support for lifting the national ownership cap to facilitate transactions for local broadcasters. We perceive a growing acknowledgment that the regulatory framework should better reflect today’s competitive media landscape. Our ability to provide impactful local journalism that our communities rely on depends on these reforms. Concerning the ATSC 3.0 transition, the FCC is moving forward to expedite its rollout, which is still pending. The commission is reviewing the records, and we could see a final decision in the next 6 to 9 months. Advancing 3.0 is crucial for the industry as it improves spectral efficiency and enables new revenue streams for broadcasters over the long term. The 8th Circuit's decision to vacate the top 4 prohibition has allowed the FCC to approve transactions based on that ruling. Additionally, burdensome multicast rules have been vacated, enabling broadcasters to place a second top 4 station on a multicast channel again. As part of the FCC's quadrennial review, the commission is considering the possibility of allowing a broadcaster to own more than 2 stations in the same market, which could lead to even more portfolio optimization opportunities. Additionally, the FCC is still reviewing network affiliation agreements, but there has been no update on the timing or outcome. We are actively participating in that process, believing that policies that support local broadcasters are vital. Finally, earlier today, the FCC initiated an inquiry to seek public comments on the sports media marketplace, particularly looking at how streaming exclusives impact consumers, broadcasters, and free over-the-air access. We submitted comments regarding TV sports rights since sports programming has historically supported localism and local news. We believe the commission is asking the correct questions with this inquiry. In summary, while several items are still being processed, the overall regulatory environment is supportive and presents meaningful opportunities for the industry over time. Transitioning to Ventures, we are managing the portfolio with a clear emphasis on disciplined capital allocation and liquidity. In the fourth quarter, Ventures generated $86 million in cash distributions, totaling $104 million for the year. Included in these distributions are exit proceeds from 3 residential apartment complexes amounting to $75 million. These distributions illustrate ongoing minority exits and effective portfolio management, demonstrating our capacity to monetize investments while maintaining upside in the broader portfolio. Simultaneously, we are being selective with new capital deployment, making incremental investments of $25 million in the fourth quarter and $50 million for the entire year. This measured pace reflects our stringent underwriting standards and our commitment to prioritizing returns and balance sheet flexibility. We closed the year with $465 million in cash and cash equivalents at Ventures. This robust liquidity position gives us options as we continue planning for separation and assess capital allocation prospects. Overall, Ventures remains a significant cash generator while sustaining a solid capital foundation, positioning the portfolio for future shareholder value creation. Building on that performance, Slide 6 illustrates the evolution of our portfolio, with over half of the minority investment portfolio now in cash. Our strategy is shifting from passive minority investments to majority-controlled operating businesses. The goal is clear: to have greater operational influence, achieve stronger alignment with long-term value creation, and improve visibility into earnings and cash flow. As part of this transition, we have begun processes to monetize select legacy private equity and venture capital fund positions through secondary market transactions, which is a deliberate step in repositioning the portfolio and reassigning capital to areas where we can have a more significant impact. At the same time, we are actively creating a pipeline of acquisition opportunities, focusing on control investments in businesses with durable demand, recurring or nondiscretionary revenue streams, and strong free cash flow conversion. Collectively, these actions represent a portfolio that is becoming more focused, strategic, and increasingly aligned with our long-term goals. Now, I will turn the call over to Rob to review 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. The 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 Sunday Night 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 for our business. Distribution revenue remained a significant and 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 to our national lineup, expanding into the NBA with our Cousins podcast hosted by NBA Hall of Famers and real-life cousins, Vince Carter and Tracy McGrady. This addition further strengthens 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 The Block 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 stars 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 television. These additional events come alongside continued strength in NFL and college football programming, 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, strengthening in 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.

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 non-political year. Core advertising, which excludes political advertising revenue, increased 14% year-over-year on an as-reported basis driven by stronger core 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 4 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 a nonelection cycle. In the Local Media segment, revenue declined to $734 million from $932 million in the prior year, again, reflecting the absence of material political 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 the industry's 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 political revenue and was less than the year-over-year political 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 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 the 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, STG net first out 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 multi-year 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. 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 act when 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, 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 the 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, we're assuming stable core trends, supported by a sports-heavy broadcast calendar. At the same time, we expect a typical political crowd out 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 2022 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 lighter 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 contributions 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 core, 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.

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, 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 a 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 continue to anchor audience strength, 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.

Your first question is coming from Dan Kurnos from The Benchmark StoneX.

Before I ask my first question, I want to express my appreciation, Narinder, for all the additional detail you've provided, especially in the guidance; it’s very helpful. I value the transparency you all have shared on this. Chris, my first question is about M&A in the current environment. You provided a good background on what to expect. Everyone is eager to know when or how Chairman Carr will address cap elimination. Does it exclude networks? What’s the timeline? There seems to be some hope for a sooner resolution. We know you have been quite public about your interest in M&A. Do you think the situation will change if it gets addressed, passes legal challenges, and how might that affect other players in the space regarding M&A and its implications for you?

Having a precedent set by significant transactions like Nexstar and Tegna will be very beneficial for future mergers and acquisitions. Your point about the implications of this for upcoming deals is completely accurate. We are not idle; we are actively exploring several smaller optimization opportunities within our portfolio. Additionally, we are thoroughly reviewing our broadcast business for larger transformative prospects.

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 believe you’re correct, Dan. We provided our outlook for gross distribution for the year, and we won’t see any significant renewals until the very end of the year. This really demonstrates our confidence in the business. We established strong deals mainly in 2024, and we are benefiting from those now. We are noticing improved churn from major MVPDs. We believe the strategies they are using, especially with the effective rebundling and ongoing price increases in streaming, bode well for the fundamentals of our business. Additionally, options like skinny bundles are providing more affordable choices to consumers that include broadcast stations. Overall, there are several positive trends that contribute to our optimistic 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 kind of 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. Aaron, I should say, sorry. 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 NBCs where automotive is very strong. However, that's the smallest part of our portfolio. So we expect that the NBCs 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 with 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, J.J. Watt's wife, and Julie Ertz from the World Cup team. So we're going to be able to support with activations and being strong wrapped 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 the 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 one 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.

We have not found leverage to be an issue in our discussions about potential combinations. We have significant liquidity and cash, which was demonstrated in the Scripps offer where we included cash as part of the proposal. So far, it has not hindered us at all. We have stated publicly that if necessary to facilitate a strategic and transformative transaction, we would use resources from Ventures. Our ideal outcome remains a merger on the broadcast side with a spin-off of Ventures, and we believe this is still very much achievable as we continue to work towards it.

Your next question is coming from David Karnovsky from JPMorgan.

Chris, just on the NFL, it's getting a lot of attention. 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. First, I'd like to address the overall situation with the NFL, which has garnered a lot of attention. Most reports indicate that the networks have started early negotiations, and these renewals are taking place three years before the first opt-out option. We believe this situation benefits the incumbents and view early NFL deals as a way to establish longer-term certainty within the ecosystem. Overall, we see this positively. We think the incumbent broadcast networks are in a strong position to renew their agreements, and there is a possibility of creating new packages that would increase the overall payments to the NFL without putting too much pressure on the current partners with steep increases. Regarding how such costs would be absorbed by the ecosystem, we have a recent example where NBC secured a costly new deal with the NBA. Our expectations for the renewal with NBC were set before we were aware of the NBA deal. By the end of the year, we renewed with NBC and exceeded our initial expectations despite the NBA deal. In essence, we did not have to absorb the additional costs from the NBA, as those were mainly taken on by the streaming platform. All networks now operate streaming platforms; for instance, Fox has launched its own. In terms of our relationship with the networks, we believe we hold a strong position politically, especially with the FCC examining the network affiliate relationship. Additionally, there's been an FCC inquiry about the sports marketplace concerning broadcast sports. We also hold a robust commercial stance since all rights are available on both broadcast and streaming, and the associated costs need to be shared more equitably between the two. Currently, broadcast seems to be overpaying 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?

Thank you for the question, Ben. Regarding expenses, there wasn't a single category that stood out. As I mentioned earlier, the Tennis segment excelled in production, and the Local Media segment was strong in sales and digital expenses, along with several other expense items. I've noted in previous calls that we place a strong emphasis at Sinclair on analyzing our overall cost structure to optimize our revenue delivery. The team is very focused and actively engaged in these discussions, and we're seeing the results reflected in our quarterly figures. There's no singular item to highlight; it's more of a broad performance. I mentioned a few key points for your reference. Concerning the JSA/LMA, we haven't fully detailed that yet but estimate we're about 70% complete. Some aspects are included in the distribution guide, though there are variances to consider. Given the current subscriber churn, if you calculate this, you might find it doesn't align as expected because, even with consistent churn, overall distribution revenue is likely to decrease. So, I would say we're roughly 70% complete on JSA/LMAS.

Your next question is coming from Fernanda Lima from Morgan Stanley.

Chris, if we could go back to M&A and consolidation. I know that so far, we've seen new 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.

Right. Okay. I got it. Thank you for the clarification. 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 2 duopoly combinations, one in Providence 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, on 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.

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. To the extent 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.