Sinclair, Inc. Q1 FY2025 earnings call

Key Points

• Solid start to the year despite macroeconomic uncertainty; total media revenue in line with expectations; core advertising performances among strongest in broadcast peers.
• Distribution revenues up $15M YOY but $2M below guidance due to subscriber churn not catching up with guide. Media expenses better than expected, driving adjusted EBITDA above high end of guidance range.
• Ventures portfolio transforming to majority-owned assets; benefited from $10M cash distributions, invested $38M including Compulse acquisition; cash balance $354M at quarter end.
• Jeff Blackburn hired as Chairman and CEO of Tennis Channel; announced partnership with ATP, WTA, and U.S. tournaments with Verizon as first sponsor.
• Portland Trail Blazers coverage on stations doubled average audience size vs prior season on regional sports network; AMP Media sports podcasts launched, highlighting commitment to women's sports.
• Successful upfront presentation in New York; FCC deregulation hopes for loosened M&A restrictions and next-gen spectrum relief.
• Lucy Rutishauser to retire within next several months after 26 years at Sinclair.

Local Media: Total media revenue in line; core advertising down 4.5% year-over-year; distribution revenues increased by $15M YOY but $2M below guidance; media expenses better than expected, driving adjusted EBITDA above high end of guidance range. Ventures: Benefited from $10M cash distributions, invested $38M including ~$30M for Compulse acquisition; cash balance $354M at quarter end. Tennis Channel: Jeff Blackburn hired as Chairman and CEO; announced formation of new business unit for ATP, WTA, and U.S. tournaments partnership with Verizon as first sponsor.

Second Quarter 2025

• Consolidated media revenues expected to be lower YOY due to lower political revenues, absence of material Diamond management fees, and soft core advertising categories. Local Media core advertising revenue expected to be lower by ~2% at midpoint; distribution revenues expected to be 1% higher YOY. Consolidated adjusted EBITDA expected to be within $91M-$107M range.

Full-Year

• Removed media expense line item due to macroeconomic and tariff-related uncertainty affecting advertiser visibility. Full-year net interest expense includes non-recurring $68M fees from refinancing. Lower cash tax payments of $121M at midpoint, driven by revised taxes on Diamond exit gain from $170M to $83M.

• Macro-economic uncertainty impacting advertiser visibility and spending. - Regulatory changes not unfolding as expected, potentially limiting M&A and growth opportunities. - Subscriber churn moderating but not catching up with guidance as quickly as hoped. - Advertisers in key categories reducing visibility and pulling financial guidance, creating uncertainty in core revenue projections.

Q: Dan Kurnos asked about the FCC OpEd and whether the FCC can cap retrans rates, and Chris Ripley responded that the FCC has the ability to regulate network-affiliate relationships, and there's a groundswell of deregulatory support for the broadcast industry.

Q: Aaron Watts inquired about auto category advertising trends and market differences, with Robert Weisbord stating that leases are trending up, and both local and national advertising are running parallel with unique service approaches.

Q: Steven Cahall asked about deregulation unfolding and process steps, with Christopher Ripley stating the third Republican Commissioner's confirmation is moving forward, and M&A activity is expected to increase in the meantime.

Q: Benjamin Soff asked about the Compulse deal and expense savings, with Lucy Rutishauser noting enterprise-wide focus on efficiency and Christopher Ripley stating Compulse is a best-in-class platform with double-digit growth and accretive synergies.

Q: David Hamburger asked about retrans negotiations and churn, with Christopher Ripley stating no impact on Q1 results from retrans negotiations and Lucy Rutishauser confirming mid-single digit churn expectations remain.