Sinclair, Inc. Q2 FY2025 earnings call

Management Statement and Operational Highlights

• Leadership: Introduced new CFO Narinder Sahai and EdgeBeam Wireless CEO Conrad Clemson.
• Content: Launched 4 college football podcasts and a WNBA podcast; multicast networks had record growth.
• Regulatory: Favorable rulings by Eighth Circuit Court of Appeals, FCC proceedings, and review of network affiliate relationship.
• Financials: Balance sheet strong with long maturity profile, net leverage 1.8x, liquidity strong. Consolidated media revenue was $777 million, adjusted EBITDA was $103 million, exceeding guidance midpoint.

Segment Performance

• Local Media: Adjusted EBITDA was $99 million. Distribution revenue was $380 million, 1% below the prior year quarter, driven by lower-than-expected subscriber growth for virtual MVPDs. Core advertising revenue was $272 million, within guidance but down 4.7% year-over-year on an as-reported basis due to macroeconomic and tariff-related pressures. Media expenses were $542 million, $23 million favorable to the low end of guidance.
• Tennis Channel: Total revenue was $68 million, up 1% versus the prior year quarter but below guidance, driven by softer advertising trends. Adjusted EBITDA was $13 million, at the high end of guidance.
• Ventures: Benefited from $6 million of cash distributions and invested $11 million. Ventures cash balance was $393 million at quarter end. In mid-March, acquired the remaining 75% stake in Digital Remedy for approximately $30 million. Digital Remedy is a Rule of 40 software company, and Sinclair comprises approximately 40% of its total revenue. The minority investment portfolio and cash had a book value of over $726 million as of quarter end.

Guidance

• Third Quarter 2025: Consolidated media revenue expected to be $744 million to $768 million, core advertising revenue $303 million to $314 million, consolidated adjusted EBITDA $71 million to $93 million.
• Full Year 2025: Substantially reduced cash tax expense guidance to $46 million midpoint, a $74 million improvement from prior guidance, driven by the passage of the One Big Beautiful Bill Act.

Risks

• Macroeconomic: Impact on core advertising categories due to uncertainty.
• Network Affiliate: Burdensome practices hampering local broadcasters' ability to serve communities.
• Virtual MVPDs: Slower subscriber growth affecting distribution revenue.

Question and Answer

Q: Aggressiveness on buyer side and network remedies A: Confident in reverse compensation trends; virtual MVPDs had sub declines, but football season expected to boost subscriber numbers.

Q: Subscriber trends and core ads A: Virtual MVPD sub trends, core ads seeing signs of improvement with Tier 2 automotive activating.

Q: 3Q guidance and Ventures monetization A: 3Q guide affected by asset sales and Digital Remedy; Ventures monetization focuses on quality, with some assets to be monetized.