Today, Chris Ripley, CEO of Sinclair, Inc, and Narinder Sahai, CFO. Thank you for taking the time for joining us today. It's great to be here. Great. Thanks, Marlene. To start, obviously a big thesis to broadcast today is the regulatory environment, the FCC. The first question is, starting with the FCC voting to repeal the 39% ownership cap, could you pursue larger M&A before any legal challenges are resolved? The short answer to that is yes. The change in the cap has not hit the federal register yet, but we do expect that to happen shortly. There is already a challenge, I think, filed with one of the courts, which is as expected. If we were to pursue a transaction that required that rule to have been changed, we would seek a prospective waiver as part of that approval. That was used in the Nexstar-Tegna transaction, for instance. We do not know how the ultimate challenge will play out, but it probably will be over a significant period of time, and we strongly believe the FCC has the better case there in terms of their ability to change the cap. That will play out over a long period of time, probably through multiple courts. In the meantime, the ability to transact should be there. Great. What do you see as the next gating item to large-scale consolidation? Is it financing, valuation, willing counterparties? Well, we have never had a better regulatory environment for broadcast on the federal side than we have now. You just mentioned the cap being vacated. We also, earlier last year, we had the two Big Four rule be vacated by a court ruling. There may be further local ownership loosening in the Quadrennial Review. Most importantly, we have had a shift in the market definition at the DOJ, as evidenced by their approval of the Nexstar-Tegna transaction with no required divestiture. It is really a great environment from a federal perspective, but then you also have this new issue that has been emerged by DirecTV, and the state AGs, specifically acute in media, affecting Nexstar-Tegna, but also affecting Sky, Warner Bros. We have learned a lot from looking at that transaction and how that playbook has been run. I do think there are ways that we can mitigate that attack vector on future transactions. But it is undoubtedly an additional overhang on large-scale M&A. Then there are, as you mentioned, sort of counterparties need to be willing. Control issues need to be figured out. That is the other area within the industry that is, I would say, preventing bigger deals from hitting the market more than you have seen. Right. Great. Does the remaining time under the current administration impact your M&A strategy at all? It doesn't impact. Undoubtedly, we would love to get large-scale M&A done inside of this administration. We are doubling down right now on market-by-market optimization, and we think there's a lot to be done there. Previously, that wasn't our focus. We were focused on landing a bigger deal. But we have a very robust pipeline of market-by-market discussions there. We think those transactions can be very accretive, where we're generally focused on overlap markets, doubling up and sometimes tripling up. Those will be not only accretive to the equity but also de-leveraging. We think there's a lot that can be done in that area over the next two years, and then we'll have to see what happens with the change in the administration. Where we are transactionally, we'll certainly have on the books very favorable rules, as we've already talked about. I think you just never know with a change in administration, but it would be very intellectually dishonest to hold the industry back from continuing to transact. Great. At what level of leverage would you be comfortable in any M&A or combination scenario? What would you like to achieve from a balance sheet perspective, ideally? Look, ideally, we would get back to high 3s, low 4s. A large-scale transaction, like the Scripps transaction we pursued late last year, would've gotten us there in one fell swoop. There's multiple ways for us to get there through the market-by-market transactions, further spectrum monetization, cash flow creation, which is going to be very big here in the fourth quarter with political. That's our target, and certainly M&A, I think, will be an accelerant to get there. No discussions of any kind to report at this point? On the M&A front, again, we have a very robust pipeline on the market-by-market front, so I'd expect to see some news coming out there. Okay, great. Turning to political, obviously a bright spot for broadcasters, this midterm election season. You recently raised your guide to at least $375 million. Are there any trends or updates that you can share today? Yeah. I think let's start with the size of the pie, because this cycle is historic. If you look at AdImpact, they're projecting 2025, 2026 political cycle to be $11.6 billion in total political spending, which, to put it in perspective, is higher than the 2023, 2024 presidential cycle, which was at $11.2 billion, and 30% higher than the comparable midterm. So the pie itself is quite bigger. And I think critical for us, broadcast is a significant piece of that pie, roughly $5.6 billion. So that gives us a lot of confidence. I think number two, if you look at how we are positioned, and if you look at the top 10 markets which are expected to be large political spenders, we are very well-positioned in those markets, with six competitive Senate races in those markets, seven competitive governor races in those markets, and over 30 competitive House races. So we feel very good about our positioning in those markets. And also keep in mind that there is a local news component to it, which brings in a lot of trust halo, if you will. And I think that's important to reach those undecided voters. So I think that's very important to keep in mind. If you look at our second quarter political revenue compared to comparable cycle in 2022, it was up 9%. I think the trajectory kind of points to our updated guide of at least $375 million for the cycle. So I think we feel good about where we sit today. Great. And can you share what portion of that is already booked or the remaining opportunity is booked? Yeah. I think what I would say to that is, as you get into these last eight weeks, I think it becomes more of a question of managing the yield and the pricing because the demand is visible. It is there. I think what swings some of these numbers is a few things. I think one is how competitive these races are. If you have races that tighten, obviously more dollars flow in. If there are races that are breaking open, then you will see some spending pulled back and maybe redeployed in other markets. If you look at fundraising, which is a big driver of this, it has been at historical levels, and that spending has occurred earlier in the cycle. I would say, all of these things kind of point to a record cycle. And like I said before, we feel good about where we sit on the at least $375 million guide for our political. Great. Revenue. Great. Thank you. As you think about future cycles, what impact, if any, do you expect from recent legislative rulings around coordinated spending and the lowest unit charge eligibility on political advertising trends? I think there is especially a focus on 2028 versus. Yeah. It is a very interesting question, and I think there is a lot of movement over the past 10 days, I would say, two weeks on this. Let us just maybe level set there first. The Fourth Circuit, they set aside the Media Bureau's guidance in late August, and then Supreme Court kind of stayed the Fourth Circuit subsequent to that in early September. What all of that means is that party-coordinated spending is back on to be eligible for lowest unit charge. Okay, so what that means is there is more spending that can take advantage of the preferential rate. So that is going to increase the demand for political spending, although it would put some pressure on pricing. I think here the question is going to become more of managing yield and the pricing, more than anything else. We don't believe it's going to have a very significant impact, positive or negative, one way or another in this cycle. Part of the reason is if you look at history and if you look at political party spending on these cycles, that has been mid-single digits for us. If you keep that in mind, one way or another it will have some impact, but we don't expect that impact to be very material. I think the last thing I would say to you is that, and I think a lot of discerning listeners know this, lowest unit charge is not a single number. Lowest unit charge gets updated. It's across multiple time periods. There are rate cards around it. There's a lot of science that kind of goes behind it, and those can be kept up to date. That's what I mean by yield management as we go through the cycle. You have flexibility to basically moderate price versus volume? Yeah. Within the predefined rules. We can't just go in and change it simply because there's a higher demand. We will just have to manage it as you go along. Okay, great. I think outside of the LUR, a longer-term question around political is how broadcast will continue to compete and maintain its share of political ad revenue, just given all the other outlets of media and ways that you could actually advertise. How does broadcast kind of maintain its 50% share roughly of overall political advertising revenue in your view? Yeah. Look, broadcast is the largest in these media although Connected TV is taking share which is focused on targeting. When you look at political, there's a structural reason for broadcast because no one matches the broadcast reach. If you look at how some of these races and elections are decided, you want to reach the undecided voters versus targeting those who are already persuaded. If you look at Sinclair's footprint and you look at who watches, we have 1/3 of our viewers which are Republican, 1/3 of our viewers which are Democratic, and 1/3 which are independent. It's a very good cross-section and broadcast kind of provides you that reach to reach those undecided voters which can sway the election one way or another. I touched on a very important point that there is a local news adjacency to it. These are the people who trust local news. So there's a trust factor there that comes in that only broadcast can deliver. CTV doesn't do that. Great. I think I would add to that, Marlene, that if you look through history, there's always been something new that comes along. Last cycle was Connected TV which took $2 billion out of the 12. Before that was social media. Every cycle, although that new area takes some share, the dollars allocated to broadcast kept going up. Wasn't true in other mediums necessarily. That goes to what Narinder was talking about. We have the viewers that decide elections. So those are the people you want to target, those are the people you want to reach and that's why dollars to broadcast continue to go up cycle over cycle. Great. Turning to core, is there any update you can give us since you reported anything notable in particular categories of advertising that's maybe changed or is notable? Yeah, I think we have been very consistent in how we have messaged how core is trending or how we expected it to trend. Even if you go back to late last year when we issued the preliminary guide for 2026, we cautioned on macro. We were seeing some signs there. As we progressed through the year, we continued to see those macro pressures materialize in the numbers. Although we held our guide in our first quarter results, we thought it was prudent to revisit that in the second quarter when we reset that guide. It's not a broad-based impact. There's certainly political crowd out that's impacting core and that is to be expected. But the political cycle is very strong this time around as we just went through it. If you look at just the core key categories, the impact is not broad-based, it's just concentrated in a very handful of I would say cost-pressured categories which are very consumer facing which impact consumer confidence and consumer balance sheets. Those are the categories which we saw were lagging in the second quarter and we have continued to see that continue on in the third quarter as well. So there is not a huge significant change from what we observed in second quarter into the third. The trends have just persisted so I think it was very prudent for us to go back and reset that. Great. Nielsen revised their local TV methodology. As they implement that into local TV currency, do you expect any impact on audience measurement and advertising demand? Yeah. On Nielsen, I think they have made this would be the third measurement upgrade in two years from Nielsen. They moved to big data and panel last September as everyone knows. Then they expanded out-of-home measurement and then most recently co-viewing measurement, which I think these are all positives and actually really truly capturing the audiences who are viewing all of these different mediums. I guess on magnitude what I would say is the Nielsen's co-viewing pilot which went into effect earlier this year showed roughly a 4% lift for marquee events in broadcast, which I think is hugely positive. I guess they still have some work to do to satisfy all the different parties. NFL will always say that it is still undercounting or not measuring those. I think what matters for us is that advertising is clearly priced of measured audience, right? All of this does not change overnight, but I think the trajectory is in the right direction. We have always felt that broadcast was undercounted. There are a lot more audiences that go to broadcast for appointment viewing, your marquee sports events. I think all of that is very positive. I think it is very early for us to size the impact of that, how it translates into revenue for us. I think it is all moving in the right direction. Great. On the retransmission side, two major network renewals remaining this year. I think roughly 2/3 of subs renewing next year. What do you think are the biggest drivers of future retrans growth? Is it pricing, churn, something else? There are really three big trends happening as it relates to our net retrans, and thankfully, they are all moving in a positive direction for the company. Number one is we are seeing churn improve. We have seen that through several quarters now, driven by new strategies rolled out by Charter and others who are bundling in more streaming packages into their base pay TV offerings to consumers. They are very significantly changing the value proposition from a consumer perspective. I love to point out that if you take a look at the Charter offering and you subtract the cost of all the bundled-in streaming services, the cost of what legacy Pay TV would be, which would be the broadcast channels, ESPN, and some cable channels, is less than $30 a month on a net basis. You compare that to the prior offering, where they didn't bundle in all these streaming platforms, that was $100. You've significantly changed the value proposition to staying with a Pay TV provider, like Charter, and that's why I think you're seeing other MVPDs follow suit with a similar strategy. And that's why you're seeing the consumer react and saying, "Wait a second here. This is a significantly different value." Beyond the value, they're also making it easy to have all your video in one place. You can't underestimate the incentives and the power of simplicity in having all your video in one place. You're starting to see that in the numbers translate through. You're seeing this bottoming happening in the Pay TV ecosystem, which has been long predicted that it would happen, and now you're actually seeing it in the numbers. That's the first trend. The second is, from a broadcast perspective, we are and continue to be the most important channels in Pay TV. We have the best content, be it sports or news or even our entertainment content. We are one of only a handful of the must-haves on Pay TV. When we are up for renewal with our MVPDs, we still deliver much more audience than the percentage that we take in terms of the Pay TV payment pool. That enables us to get favorable renewals. We're expecting that to happen next year as we come up with 2/3 of our subs. Then on the network side, all the networks now provide all of our content on streaming platforms, the last of which was Fox, launched last year, Fox One. Those streaming platforms now generate significant amounts of revenue. They benefited from this implicit subsidy from broadcast, where our content moved over there, helped build those businesses up, and those businesses really didn't pay for the content. There's a rebalancing that's happening with the networks, where the burden of the content cost needs to shift more towards streaming. Those are the three big trends that are moving our net retrans in a positive direction going forward. You do think you'll continue to grow price or that price will continue to increase? I do think so, yeah. Okay. You touched on this, Chris, as we do think about sports rights in particular and that rising cost. Just thinking about it from the network side flow through the MVPD side and how that ultimately affects you and how you pass that along, for lack of a better term. Well, it doesn't look like we're going to have to answer that question as it relates to the NFL. The only experience that we can point to in recent history was the NBA deal with NBC, where a significant amount of fees were agreed to by NBC to bring the NBA back to broadcast. It's been a phenomenal success for the NBA and for NBC in terms of viewership and reach, and I think both sides are very happy with the outcome. But it was a big step up in terms of what was paid to the NBA. And we lapped a renewal with NBC, where our expectations were set at the beginning of the year, the renewal was at the end of the year. In between setting our expectations and renewing with NBC, they signed the NBA deal, and you would think, or sort of the natural question is the question that you're asking right now. Are they going to pass that cost through to us as an affiliate who would benefit from that content? Well, all I can tell you is that we exceeded our original expectations that were set before the existence of the NBA deal ever was known. In our recent history, would point to our ability to push back on this pass-through concept of the cost. It goes back to what I mentioned earlier, which is that same content is also on Peacock, that NBA content. The reality is where that cost got allocated was to Peacock, not to broadcast. It is just going to be the same discussion to the extent that there is more having to be paid for NFL. Great. Turning to Spectrum, you recently highlighted that your portfolio is maybe worth up to $4.1 billion through auction, negotiated lease, or sale. What are the practical steps or timeline to actually extract value from your Spectrum assets? Just to put a finer point on the $4.1 billion number, which I mentioned on our last earnings call. When you take a look at the 2017 incentive auction, the average price per megahertz-pop was a dollar. But if you take a look now at recent comps in low band, it would point you to $2.50. The $2.50 is just applying that to our total megahertz-pop within all the stations that we own. In a world where we have sunsetted 1.0, which is in an NPRM in front of the FCC right now, where the whole industry is pushing to have that happen, you only need 25-ish% of your total spectrum to do what the core business is today. Which leaves 75% to do other uses. You could obviously put out more content, which some broadcasters may choose. We and other large broadcasters have formed EdgeBeam Wireless to work on datacasting applications to fill that excess spectrum with more revenue-generating opportunities, and that includes things like enhanced GPS, digital signage distribution. It also includes Merkhet Solutions, which was spun out of NAB, which is a backup for GPS. They are working closely with DHS and DOT to get acceptance as the backup for GPS, which is sorely needed in the U.S. There are other applications under development around automotive and autonomous vehicles. So that is another way to monetize our spectrum. The third way is something that was sparked by a recent Wells Fargo research report, citing this sort of dynamic that I mentioned earlier that the market value of the spectrum that we have is a lot higher than what the last auction would imply. Could a certain amount of our spectrum be repurposed for wireless users like a T-Mobile, Verizon, one of the new LEO players on the satellite side. The short answer to that is yes, there's certainly historical precedence to that. That's essentially what happened in the 2017 auction. There is no auction authority granted by Congress around another auction for our spectrum. But something could be done on a negotiated basis. I do think there would be interest from wireless players in that sort of arrangement. In terms of what would have to happen to get there, you would need FCC approval. You would need some amount of clearing of certain bands of broadcast stations, and then you would have to have a counterparty, obviously. I don't think the industry's interested in doing another auction. You'd have to go to Congress to get that approval. It's a bunch of uncertainty. Last time around, big bidders like Verizon and AT&T didn't show up, and that's one of the reasons why the outcome was not what people had expected it to be. I think there is an opportunity going forward to do something like that. But there are steps that need to happen in order to unlock that. Probably hard to answer, but what could be a reasonable timeline where we could see some form of cash flow generated from your spectrum assets? There already is revenue being generated by EdgeBeam, but it's early days. Those are new applications and new markets that are going to have to go through a development curve. A key component to really unlocking that is sunsetting 1.0. The NPRM that's currently in front of the FCC calls for a sunset February 15th of 2028. We're hoping to get the FCC to act on that NPRM post midterms. That date probably moves around based on what the final NPRM looks like. But that is really the key unlock for a lot more revenue, be it through datacasting or be it through what was talked about earlier in terms of leasing to other players for their use. Great. Turning to ventures, how quickly could venture assets be monetized? Second, do you still prefer a venture spin to occur alongside a broader, a larger broadcast transaction? We've been actively monetizing ventures assets over the last several years. We're roughly $500 million in cash now and $500 million of minority investments. We continue to chip away at those minority investments and monetize those when opportunities become available. Some of them we'll just have to wait for them to naturally go through their life cycle. Digital Remedy is not something we're looking to monetize anytime soon. It's growing very nicely from an organic perspective. We're looking to actually add inorganically acquisitions like we did last year that have been very accretive. So we're looking to scale that company up. Then Tennis Channel, again, not looking to monetize that either. That's going through a whole streaming transition, much like what ESPN is doing right now. It's got a great new leader in Jeff Blackburn. He's revamping the entire digital platform to be relaunched in Q4 of this year. We're expecting really great things out of those new apps. He's got a great rights portfolio, a lot of excitement around tennis in terms of participation and viewership, and getting the streaming subs up on that business up significantly, which we think Jeff can do that, will dramatically change the valuation of Tennis Channel. So, no plans to necessarily do anything on those two big portfolio companies. Then on the minority investment side, we're always looking for opportunities to monetize those because we do think it's pretty hard to get credit for those from Wall Street. Then in terms of your question on spinning, that work is still proceeding on that front. Our preference is to do a spin merge, where we find a merger partner for broadcast. We've not been shy about talking about that publicly, and that is still our preference. We're going to keep the optionality of ventures and its resources in play until we figure out what the right path is for the broadcast side. Great. You touched on this earlier, Chris, but what do you think is the appropriate long-term leverage target for the broadcast business? Yeah. In terms of leverage target, what we have said is it should be for us in the high 3s to low 4s over the medium term. I would say, if you take a look at it over the much longer horizon, I think it has to be in the 3s and the mid-3s. We obviously have taken significant steps to de-lever the broadcast balance sheet. As you know, Marlene, since the start of the year, we have retired or repaid $320 million of debt. We also have just, in early July, repurchased $25 million of term loan. We fully intend to use the free cash generated in this political cycle and in the 2028 political cycle to continue to de-lever the balance sheet. Plus, I think Chris mentioned in the M&A section, there are multiple other levers to de-lever the balance sheet from in-market optimizations, portfolio optimizations. We have executed a significant amount of JSA buy-ins. Then any large-scale M&A or any spectrum optionality will significantly de-lever that as well. Narinder, in 2Q of this year, $320 million of term loan and AR facility was paid down. What is your preference on a go-forward basis in terms of the float versus fixed mix? Yeah. Obviously, fixed and floating mix is not a static number, as you know. It's a function of the rate environment. We are currently at 70% fixed and 30% variable. If you take into account the interest rate hedges that we have on the books. I think that mix kind of makes sense. In terms of deploying capital where we go, I think we will take a look at it obviously from a returns perspective and what minimizes the interest expense as well. As well as we're going to place emphasis on nearer maturities. I think if you think about it that way, I think you will see that the floating rate exposure kind of makes it to the top of the list, although there are opportunities in our second lien notes as well. After several years of cost initiatives, is there meaningful opportunity for further cost optimization? Yeah, that's a great question. I don't think about cost optimization as kind of a one-off exercise. I think we continue to look at the business we are in, the long-term trend lines in the business that we have discussed. We ask ourselves the question, if we started from zero, what should the cost structure look like? How would we go to market with the top line that we have? I think that drives different set of conversations than just trying to optimize one department or another. I think Sinclair and perhaps others have done a fabulous job centralizing a lot of those functions over the years. I think the opportunity now is to see how can we make these workflows, which were centralized in their silos, kind of talk to each other. How do we make these workflows end-to-end and cross those silo boundaries? We are obviously working on that. As Chris likes to say, when we think about cloud, that we have paid our tuition there. We have moved a significant amount of our operations to the cloud, which obviously increases the operating expenditures, but relieves your CapEx on an ongoing basis, right? So, I think there's significant leverage to be gained there as we've kind of gone to media cloud playout. We're working on significant transformation of our news operations and content centers. Deploying the cloud workflows, I think there's a significant opportunity there. I think everybody talks about automation. I think yes, that is table stakes. Then artificial intelligence, I think the way I think about this is just reinventing and reimagining and rewiring our core businesses. How can we deploy this technology to move at speed, be better at what we do, and deploy our resources in the most efficient manner? I think we've started that several years ago. We are in the thick of it. We just don't talk about it in a very visible fashion, but rest assured the team is very focused on executing on those initiatives. I just want to underscore something that Narinder alluded to there, which is that it took us over three years and tens of millions of dollars to transition to the cloud. No other broadcast peer has done so. Once you get there, which we're just getting there, we're going to finish by the end of the year, all of our stations, it then unlocks a significant amount of transformation ability for automation, for AI, not only just in terms of streamlining workflows, but also getting your content into new endpoints and using things like AI to version it for different platforms, for instance. I do think on a relative basis, you're going to see more out of us in the years to come because we paid that tuition and we spent those years and the extra money to do it, and our peers haven't done that. Great. With one minute left, what do you think the market currently underappreciates about Sinclair? A lot of things. Much more than a minute worth. Look, from an equity perspective, we're clearly mispriced. We talk about this a lot. We don't think we're getting much of any credit for our minority interest portfolio on the ventures side. The true value of Digital Remedy and Tennis Channel is also being sort of lost in the fact that we have this holding company corporate, which ends up canceling out a lot of the EBITDA there, which is I think a totally different valuation profile than the broadcast side. Then on the broadcast side, we really have gone through several years of heavy investment. Like we mentioned, the cloud, but there's been other initiatives rolling through which we think are going to have big impacts on the business going forward. The positive trends that I mentioned earlier around the core business on retrans, we didn't spend a lot of time talking about the advertising side, but we've done significant work on digital and audio and podcasting, which is starting to bend the curve upwards on core ad growth. There's a lot of positive trends that have taken a while to seed, but they're going to start playing out over the years to come in the core business. If you buy us now, you're basically getting ventures for free. Great. Well, Chris, Narinder, thank you for the time. Thank you, Marlene. Thank you.