Pleased to have Sinclair Broadcasting with us today, both Chris Ripley, CEO, and Narinder Sahai, CFO. Thank you so much for coming. Thank you. All right. Great to be here. Yeah. Can I start with a high-level question? At the industry level, forget about Sinclair for a second. I would love to just start with the health of the broadcast industry as we sit here today. How would you characterize? The industry trends that really drive our business are quite healthy. I would highlight three in particular. Okay Around net retrans. Number one is we are seeing a moderation of churn, and this is being driven by new strategies deployed by MVPDs like Charter, who are bundling in their streaming packages into their core cable offering. We think that's been really effective. We term that the great rebundling. So you're seeing this sort of bottoming out on paid TV penetration, if you will. That's been predicted for quite some time, but we're actually now we're finally seeing that in the numbers. That's really important. The second trend I would highlight is the continued pricing power within broadcasting. The broadcast industry as a whole still takes far less out of the pay TV pie, dollar pie, than the viewership that it puts in. You're talking ad dollars? No, I am talking about distribution dollars, retrans. I think we account for about 45% of the viewership within pay TV and we are around 30% of the pay TV dollars that get distributed out. Furthermore, as we continue to try to close that gap and get to parity, there is a good argument that we deserve more than our viewing share because the premium nature of the content that we deliver, like NFL sports, college football, playoff basketball, playoff hockey, and news. It really is the most premium, the most must-have content on paid TV is broadcast, and increasingly so, as the average cable channel has really gotten gutted by streaming. The third trend is all- Can I pause you for a second? Sure. That 30% of dollars versus 45% of viewership, I thought maybe I misheard you. You said net retrans in there. No, I was just talking about gross. Okay. Gross. Okay. Sorry. Gross. Yeah. Okay. Yeah. The churn side and then what we get paid by the MVPDs feeds into gross. Both are very positive trends for gross. Right When you look at what we net down and what we pay the networks, there is also a rebalancing going on where the networks have all launched significant streaming services. Yep. They're, by and large, years into that. All of our content is available on those streaming services. But yet those streaming services do not pay their fair share for the content that they are benefiting from. So there's a shift in terms of the cost, the content burden between what the networks allocate to the streaming service and what they demand out of the broadcast channel. So that is also a positive aspect in terms of what the net cost of our content is. And those three trends, I think, bode really well for the years to come in terms of our main profit driver, which is net retrans. You look at the advertising side. Can I pause you there for a second? Sure. Just on that third one. Sorry to keep interrupting. Is another way of saying that third one that, because the content is not exclusive on your stations, that the payment that you make to be an affiliate should be less? Is that another way to say. That is another way to look at it. Okay. Yeah. All right. And the other way, there's the exclusivity component. Yep We used to have exclusivity. We do not anymore. Right. Then when you think about the same content is going into two different endpoints. Right. Okay? Both endpoints are being monetized, and the burden of the cost of that content should be shared fairly between the two. Understood. Then on the advertising side, we are having a banner year on the political ad front. We just raised our guidance recently up to $375 million plus. I expect that we will break new records for midterm advertising. We broke new records for the presidential cycle in 2024, and I think we will establish a new record in 2028 with dual open primaries. So that will be a very strong point. On the core advertising side, we continue to manage through spot declines, but we continue to also grow our digital side of the business and our audio side of the business. As that becomes a bigger percentage of our total advertising pie, we are able to bend the curve up in terms of core growth. When you say spot declines, you are just talking about Regular linear. No, understood. That's not a function of you reducing ad load, that's just a function of the viewership, like the engagement coming down, which means there's less spot impressions to sell. Is that what you mean? Correct. By spot declines? Okay. Correct. All right. Got it. Correct. We're able to make up for that and then some as the rest of our business becomes a bigger percentage of the whole. Perfect. On the cost side, we specifically have made significant progress rewiring our business, putting it on the cloud, transforming our content centers, automation and AI of course. This is going to have significant impact on the years ahead in terms of reducing the cost of delivering the content to our consumer. Perfect. It all sounds healthy. Can I dig into one of those? Because I admittedly get a little bit confused about the pay TV trends, which you said the rate of cord-cutting is moderating. There is part of me that I have seen some data, and in fairness, I have not seen it every year, but it implies that the majority of the cord-cutting that has happened has occurred among the households that do not care about sports, and we are almost done with those. Whoever is left, most of them care about sports. The bull case would be, that is why you are going to see a moderation in cord-cutting, because where else are you going to get all your sports? That makes me pretty bullish, right, in terms of the cord-cutting trends. On the other hand, I put on the other, one side is the angel, the other side is the devil. I look at ESPN Unlimited and Fox One, and I say, "Oh my gosh, this is the first time that you get all the major leagues digitally," right? You do not need to have a pay TV subscription, which is a new phenomena, and that makes me nervous. Do you have, I guess your preference would be the former, that we are not going to see consumers sign up for six different apps to get all their sports. They are just going to enjoy the simplicity of having one subscription, a pay TV subscription? Well, and you've half answered the question. Okay, great. Because it's not just about simplicity. Okay. Though that certainly is a big driver. Okay. But it is also about value and pricing. Okay. If you are a consumer and you are interested in sports, there is no cheaper way for you to access all the sports than having a pay TV subscription. If you were to try to piece together those six apps or whatever the number is. Yeah. In order to get all the National Football League or college football, what have you would quickly find out that your total cost to do that would massively exceed what the cost of just the average pay TV bundle is. So the value proposition is really there, and when you think about what Charter Communications has done, and others are following, is that they have gone even one further. They said, "Okay, you can have this pay TV bundle, which has pretty much all the sports you care about, and we will give you all the most popular SVOD packages bundled in as well. Right. So the value proposition has dramatically changed over the last couple of years. When you break down Charter Communications' offering, just the cost of the traditional pay TV component of it, which would be your entertainment, cable channels, ESPN, and the broadcast stations amounts to about $30 a month after you net out all the cost of all those streaming packages that they bundle in. So you went from, a couple of years prior, that being around $100. Yeah To now being worth $30. The value proposition fundamentally changed for the consumer and also made it simpler, made it easy. One portal to access all the streaming content you want and your traditional pay TV bundle, which is anchored by sports. Understood. Can I ask. Then there's I think a couple of other points to that. I think one is obviously, Chris mentioned value and price, but there's also fatigue. Right. Right. If you put the customer at the center of it, they have to research what platform the game is on, and that's real friction. Agreed. I keep that in mind. I think the bigger point here is also on league economics. At the end of the day, audience reach is very important and there's nothing that rivals broadcast still in that reach. I think that's very, very important to keep in mind. I think streaming is probably additive reach, not a bundle killer. That's great. Can I add one more that gets me excited, but I don't hear as much conversation about it among investors. I don't hear as much conversation about it, even among some of my peers. Is the launch of this YouTube TV package that only has sports. This seems like a very big innovation to me in that it sort of gets to the terminal year where people don't care about MTV or VH1 or Noggin, right? They just want the sports. And for the first time, I think you now have the simplicity of admittedly a digital MVPD, sort of giving the consumer what they want. And yet I haven't seen as much talk about this. I haven't seen other MVPDs sort of follow. Well, no, there has been some others. There have. DIRECTV has done a package like that. I think Comcast has done a package like that. There was a lot of buzz around that when they put it out. It was fine for us because we were included in those. Of course. packages, right? All good. But when you, again, I think it comes down to consumer simplicity and value proposition. Okay. The price point of those packages was not that different from the full package. Well, I think YouTube TV is charging $65 a month, $65.99 for their sports-only pack. Right. The normal package is 80. Okay. Okay. How many people were not going to pay the extra $15 just to get the full package? I see. If there was a bigger gap there, I think you would have seen more uptake on the sports only, but for $15 more, might as well have the full package. Okay. You know? Let me get all those streaming apps. Then you get all the other, yeah. Okay. The value prop is even better if you stick with a company like Charter Communications because YouTube isn't bundling in all those streaming services as well. Okay. But either way, what's important from us is that they stay within the pay TV ecosystem, whether it be pay TV, pay TV sports only, or, sorry, YouTube sports package, or DIRECTV, or Charter Communications. Understood. And, what we're seeing in the industry right now is that bottoming out that I described earlier in terms of where pay TV penetration is headed. Understood. Makes sense. Can I shift to consolidation? I've been on the phone with some clients and they just come up and they say, "Oh, there's no more consolidation among the broadcasters." I said, "What are you talking about? The FCC sort of lifted the cap. It feels like everyone should consolidate." They're like, "I'm just telling you there's no more consolidation." I'm like, wait a minute. This battle that's happening between Nexstar and Tegna is a subset of these markets where they own two or more of the big four. Why would that just sort of stop in its tracks pay TV consolidation? I'm just confused about that point. I don't know if you agree with this, that all broadcaster consolidation is on ice, or if this client misspoke. Well, look, it certainly has chilled the market. Okay. No doubt about it. But it has not stopped consolidation. Okay. We have continued to pursue big opportunities and double down on market-by-market optimization. We announced earlier in the year a doubling up in Tulsa, and we've got several market-specific or maybe a handful of market transactions in the pipeline. Okay. As far as large-scale M&A goes, we have learned a lot watching that transaction. Okay. Sometimes it does not pay to be first through the. Understood through the pipeline. We think there is a lot you can do to mitigate what is going on with the state AGs. Right. And really it's all paid for and motivated by DIRECTV. Of course. We think that can be mitigated. We think the rules changes that have gone into effect with the FCC are also helpful. The ownership cap you mean. Yeah. Ownership cap specifically, there's also in the works some further local ownership deregulation, so we're looking forward to that. The DOJ has never been more open for business than it is now. There was a fundamental shift in the way they viewed the market with the approval of the Nexstar-Tegna transaction. That can't be underscored enough. No doubt that there's a new attack vector on transactions in general. Sure Through these state federal courts. Right. You're not just seeing it in Nexstar-Tegna, but you're also seeing it in the PE Sky Warner Bros deal. Right. Ticketmaster I think too. It's an obstacle that can be overcome and no doubt it's had an impact, but it's not insurmountable. I tell my wife all the time, the danger of doing this in the sell side for so long is you do it for so long and you think you know something, then something changes. The state AG example would be an example of something that is just radically changed the landscape, which I was not anticipating. You talked about other FCC changes that may be in the works. Can you divulge those or is that too behind the curtain, TBD? Well, there is the Quadrennial Review. Yep. That is undergoing right now. Yes. It is the 2022 Quadrennial Review, but it does not really matter, it is 2026 now. We are expecting that there will be further loosening of some of the rules. There is not a lot of rules left, but there are rules that govern radio, there is also some rules left on the books for TV broadcast. I will not get into specifics, but we expect that that Quadrennial Review will yield some further loosening. Okay. That is great. In the sort of traditional cable pay TV landscape, I used to have these rules of thumb, which were not perfect, but you could say, oh, if a pay TV company that had 6 million subs was merging with someone that had 10 million subs, there were enough transactions where you could begin to develop heuristics, right? To say, "Okay, this is how much they are going to save on their rate card and their affiliate fees," and it worked pretty well. Are there similar sort of, do you think there are rules of thumb or things that people can use, not perfect, but as a shorthand for thinking about cost saves as it relates to broadcast consolidation? Or is it too idiosyncratic and you cannot really. There is more to it. In terms of synergies more broadly, it is very deal and company specific because one of the bigger synergy lines tends to be distribution revenue. Sure. Retrans revenue, and so that you cannot necessarily tell from the outside who has higher rates, how much higher they might be. That's pretty idiosyncratic. What you can tell, though, fairly easily is that if two broadcasters come together, probably the vast majority of the corporate overhead can go away. Okay. If you're combining two markets, two overlap markets, we use the rule of thumb that about two-thirds of the non-programming expense of the smaller station can be eliminated. I don't know if you probably don't have access to that level of information. Okay. If you're analyzing a deal, but that's a rule of thumb that we use. So those are two big areas, overlap markets, corporate overhead, that are going to be in just about any merger. I think where it gets harder for you to predict on a rule of thumb basis would be distribution. What do you think made that easier in the pay TV space? Was it just there were rate cards that everyone had a certain scale and it was sort of a known known, so you just jump on a new rate card and scale, or. Well, I don't know. Rate cards, well, again, I'm not sure, to be honest with you. There might've been it might have been more commonality. Okay. In certain things that you could assume were. Maybe I was just lucky with my rules of thumb. There you go. Maybe. What about headwinds? Are there any headwinds that people should think about, like dyssynergies, or are those nonexistent? Dyssynergies from combinations. If they are, they're really small. Okay. Very good. Can we talk about ventures, the venture spin? Okay. Do you think it's possible the venture spin can occur without it being part of a station acquisition? It certainly is possible. Okay. But we've been on record saying that our preference is to do a spin merge. Spin merge. Okay. Yeah. And that's what we've been pursuing pretty much from the start of the review. We would've effectuated it if we had succeeded in merging with Scripps. Yep. That was part of the strategy there. It's still something that we think is the best answer. And we're still doing the work needed to get carve-out audits and be ready to spin ventures. Yep. But until we see what the final picture looks like on the M&A front, we're going to reserve that spin until we have concluded one way or the other where broadcast is headed. Okay. Is that driven by tax? Is that driven by. No, really. Look, tax, obviously a spin is tax-free. But we have the flexibility for it to be taxable on the corporate side. We just want it to be tax-free on the shareholder side. Sure. For sure. And really it's driven by a few different factors. Number one, we firmly believe that given where the rules are going, that the market's headed towards two big super groups, and we want to be a part of that. Okay. To the extent that we need some of the resources at Ventures to effectuate that combination. Okay. Keeping it together will make that easier until we have determined. Okay. What options are available to us. Okay. Also, when you do spin something up, spin something apart, you do have to set up separate overhead. Yeah. For that new company. That is an extra burden cost in the setup that you want to be prepared to accept, and you want to make sure there is enough of a reward on the other side if you are going to go down that road. Okay. I heard what you said in your opening remarks around the health of the political ad market. You talked about being able to offset some of the spot reduction you said with some of the digital growth. But one of the things that I think stood out, and maybe I am wrong, is that of all of the ad mediums that are out there, outdoor or print or digital or CTV, it felt like local TV ex political was one of the only pockets of soft weakness. There is a little bit of a debate, I think, on the buy side about is this just political crowd out that we are talking about? Is it something a little bit deeper than that? What is your thought on that? Is it just political crowd out? Does it go a little bit deeper? If it is deeper, what is it? Yeah, good question. It is not just the political crowd out. Okay. If you take yourself back to perhaps the May call, we did outline that we are seeing some macro uncertainty. The visibility on the advertiser side was restricted. And we saw some of that materialize in second quarter. It is a genuine caution in a handful of cost pressure categories. Okay. Which is driven by some macro uncertainty, tariff and fuel. And you are seeing some of that play out today. The overall market is significantly down because of all of that. Right. Yes, political crowd out does play a part in this, but that is not just a political crowd out, just to be clear on that. Yep. Just as a reminder, I think our core advertising was $308 million in the second quarter. Okay. Our full year guide is $1.22 billion to $1.28 billion, which is down $40 million at the midpoint, which incidentally was the same number we took up on the political guide. It is natural to ask that question. Right. It is a good question to ask. It was not all political crowd out. Okay. Yeah. Super helpful. You guys have really leaned into digital advertising, including podcasts by the way. How happy are you with these initiatives and how has it progressed relative to what your initial thoughts were? Yeah, we are very pleased with the progress we have made there. For our advertisers, they are looking for audience engagement, right? It is not just linear platform. It is how we package in a cross-platform deal combining linear with connected television, with our digital properties, with our audio and podcast, and with live activations. We actually saw a real live example of that in the FIFA World Cup where we actually were successful in combining all of these elements and provided our customers with a way to engage with the audiences in a meaningful manner. That was a very interesting proof point for us, and that capability exists. I think that is where you see a lot of the clients going. They want to engage with the audiences in a very meaningful manner. We are very happy with the progress we are making there, and we are going to continue to scale that organically. Okay. That's great. You brought up World Cup, and I think Fox is a decent partner of yours in terms of network affiliations. Should investors be spooked about the World Cup comp as we move into next year? Or do you think that's manageable given the underlying growth in digital? It is manageable. It was meaningful. But I think you have to keep a few things in mind. One, it was an expanded format, but Fox retained a lot of the inventory. The affiliates did have some inventory, so that played in. As I referenced with our cross-platform capabilities, we were very pleased with the outcome. Yep. When you look at 2027, the comp is not just looking at World Cup or no World Cup. You are also comparing a non-political year to a political year. One I assume investors are used to. Yeah, there are puts and takes there. I would say yes, it was meaningful, but I would not characterize it as something that is insurmountable. Okay. We also have the FIFA Women's World Cup next year, too. Yeah. That will be helpful. Okay. We have a complimentary podcast for that, too, that we're playing the same strategy on. That's great. Who has the FIFA Women's World Cup rights, which network, do you know? I don't remember for next year. Yeah, Fox. Fox also? Okay. Fox. All right. Sorry to throw that curveball in there. So uses of capital. You guys have prioritized debt reduction as your primary use of capital. Why is that so important, and where ultimately do you want to get to in terms of leverage? Yeah. So, great question. De-leveraging, we have said that on our last few calls and even prior to that, is a top capital allocation priority. At least when we look at how we do that organically. 2026 is a political year. Yep. We are going to generate a lot of free cash flow. On the broadcast side of the business, we are earmarking a significant portion of that to de-lever the balance sheet. So that is a very high priority. When you look at what we have done so far in 2026, we have actually retired or repaid $320 million of debt, which is quite significant. Beyond that, after the second quarter, early in July, we also repurchased $25 million of our term loans. So you can expect us to continue to deploy free cash flow generated in our broadcast business to continue to de-lever the balance sheet. Yep. As you know, our nearest material maturity is not until December of 2029. Right. We have a significant runway, including the 2028 political year. I would say there are benefits that come from de-levering. So when you hit the refinancing window, the pricing is advantageous given where your leverage is going to be. Then it gives you a lot of optionality. There is more headroom in your balance sheet to do different things. Then there are other things that can further drive de-leveraging, too. A large-scale M&A transaction can be quite de-leveraging. Even the station swaps and in-market optimizations that we have done with our JSA partner buy-ins and the ones we continue to look at are also highly de-leveraging, given where the post synergy multiples end up being on these transactions. So they are quite de-leveraging, too. Okay. A lot of benefits obviously accrue from that, and we don't see really a change on the broadcast side from that strategy. On the ventures side, we are very focused on monetizing our minority investments and generating a lot of cash. There's about $500 million of cash on the balance sheet for ventures. The mandate on ventures is a little bit different. The mandate on ventures is to find those businesses with very resilient cash flow streams that we can take majority positions in. And we are going to be very disciplined in how we deploy that capital on the ventures side. And to round this out, as Chris mentioned earlier, that optionality is also available to us to facilitate a large-scale broadcast transaction. All of these pieces on capital allocation are somehow linked and tied together. Okay. We think about this very holistically. That's great. Anything you want to add, Chris? One thing you didn't ask about that we're getting a lot of questions on is spectrum monetization. Oh, spectrum. It plays into what Narinder just talked about in terms of de-leveraging. It would be a very, I think, significant de-leveraging event. There is a lot of industry enthusiasm and energy around what I am terming a third leg of the stool in terms of how we monetize our spectrum. First being our core business. In a world where we are not supporting the old standard, which is ATSC 1.0. Yep We only need 20%-25% of our spectrum to support what we do today in our core business. We have an NPRM in front of the FCC now that would sunset 1.0 February 15, 2028. We are hoping to get that date may move around when we get final approval from the FCC, and we are hoping to get the FCC to act upon that at some point after the midterms. The second leg of the spectrum monetization stool is what EdgeBeam is working on, which is data casting applications like enhanced GPS, digital signage distribution, the Merkhet Solutions BPS, which is a backup to GPS, which is an industry initiative, which we think will be adopted by DHS and DOT as a backup to GPS, which is sorely needed in the U.S. These are all interesting and under development, data casting opportunities which we can use to monetize our excess spectrum. The third leg of this stool is something that we are getting a lot of discussion on more recently, which is the notion that you could just take some of that spectrum and sell or lease it to a wireless player or a satellite player. Sure. Unlike the 2017 incentive auction, which was not well attended, which really only had two buyers, T-Mobile and Dish, the demand side of the equation looks much more robust. Right. You've got probably likely demand from T-Mobile, Verizon, Starlink, AST, Amazon, LEO, and then a long list of other people who want to get into the LEO Game. If you're going to have a mobile system, you need more spectrum, and some of the best spectrum. Low band, yeah Is low band for that. Yeah. The comps point to a value of the spectrum that we currently have at around $2.50 per megahertz pop. Contrast that to 2017 when the auction cleared it at about a buck. If you've got a robust demand side of the equation, we think there's no reason to believe that it wouldn't at least hit the comps, if not more. Which is a number I threw out on the last call. If you play that math out at $2.50 a megahertz pop across our portfolio, it's over $4 billion of asset value. I think there's a lot of work being done around this now, looking at feasibility, a lease I think is also a very likely strategy as opposed to just an outright sale. There's a number of ways the industry can organize around clearing a certain amount of spectrum and leasing that out to a satellite or wireless player to create that third leg of the stool that I mentioned. If the FCC acts on the sunset provision on February 15, 2028, maybe this is wrong, I sort of think of a TV as sort of having a 7-year life. So these new ATSC 3.0 chips will go into these TVs, but then we have to wait for all of the old TVs to sort of cycle through. Does that mean investors should think of 2035 as being the bull case for when you monetize? Or is it possible to do something commercially before the last ATSC 1.0 TV goes in the trash heap? No, absolutely. You should not be thinking about it that way. The proposal in front of the FCC is that we turn off 1.0 Oh, wow. February of 2028. That date probably moves around once it gets finally approved. There's already been TVs in the marketplace for several years that are 3.0 ready. Isn't it just Sony or something? No, no. Oh. A lot of manufacturers produce 3.0 TVs. Okay. But undoubtedly, there will always be a set of TVs in the marketplace that are still on 1.0, and you can buy a dongle for $40-$50 today. And if once this date gets finalized, we anticipate a surge of volume and demand for these dongles or set-top boxes, which you can buy and upgrade your 1.0 TV. Okay. We will not wait for this. Natural, just. Natural. Yeah, that is too long. Okay. People will have to upgrade their TVs. Okay. That is great. Yeah. Well, this is fantastic. Thank you both for the time. Great. Thank you. Yeah, absolutely.