On Thursday, Sinclair (NASDAQ:SBGI) discussed first-quarter financial results during its earnings call. The full transcript is provided below.
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Access the full call at https://www.webcaster5.com/Webcast/Page/2063/53843
Summary
Sinclair Inc reported a strong financial performance for Q1 2026, with total revenue up 4% year over year to $807 million and adjusted EBITDA increasing by 13% to $126 million.
The company is focused on deleveraging, having retired $165 million in term loans at a discount, resulting in a $12 million annual cash interest expense saving.
Sinclair Inc reaffirmed its full-year 2026 guidance, citing strong expectations for political advertising and major sports events, including the FIFA World Cup, which is expected to drive significant viewership and revenue.
Strategic initiatives include closing on partner station buy-ins and completing accretive duopoly transactions, with an ongoing focus on optimizing the broadcast portfolio.
Operational highlights include substantial growth in core advertising and the success of Tennis Channel, which recorded its most-viewed month ever in March 2026.
Management discussed the broader industry issues such as the FCC’s inquiry into the sports media marketplace and potential regulatory impacts on live sports broadcasting.
Sinclair Inc is preparing for a potential spin-off of its Ventures division, though it prefers to align this with a broadcast business combination.
The company is actively exploring the use of AI for both cost reduction and revenue enhancement, with AI tools being rolled out across the workforce.
Full Transcript
OPERATOR
Good day everyone and welcome to the Sinclair first quarter 2026 earnings conference call. At this time, all participants are placed on a listen only mode and we will open the floor for your questions and comments after the presentation. 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. And ladies and gentlemen, please remain on the line while we reconnect the speaker to the conference room. Thank you.
Chris King (Vice President of Investor Relations)
Good afternoon everyone and thank you for joining Sinclair’s first quarter 2026 earnings conference call. Joining me on the call today are Chris Ripley, our President and Chief Executive Officer, Narender Sahai, our Executive Vice President and Chief Financial Officer and Rob Weisford, 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 and 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 first 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. This measure is not formulated in accordance with GAAP and is 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.
Chris Ripley (President and Chief Executive Officer)
Thank you Chris and good afternoon everyone. Let me begin on slide 3. We delivered a strong first quarter with results that reflect the consistency of the broadcast business and the growth potential of Tennis Channel for the quarter Total revenue of 807 million was up 4% year over year, while adjusted EBITDA of 126 million grew by 13%. Distribution revenue increased by 2% year over year as modestly improved subscriber trends continued and we’re starting to see the benefit of our partner station buy ins. Net retrans revenue was also up year over year. In addition, we continue to see growth in our core advertising business. Core advertising grew 4% year over year in the first quarter, a result we were pleased with given our underexposure to NBC, which delivered an exceptionally strong quarter due to its affiliates to its affiliates on the back of the Super Bowl, Winter Olympics and NBA. Looking ahead, Fox, our largest affiliation, will carry a record schedule of World cup soccer matches on the broadcast network in June and July, ahead of the political ramp in the fourth quarter. Turning to execution across our broader strategic priorities, we have built real momentum. We’ve now closed on a substantial majority of our JSA and LMA partner station buy ins with only a small number remaining and we expect the full 30 million in annualized synergies in 2026. We also recently completed two accretive duopoly transactions in Providence and Tulsa. With several smaller portfolio optimization discussions underway, our strategic review of the broadcast business remains active. As previously discussed, our ideal path forward is a broadcast combination concurrent with a venture separation. We remain Scripps’ largest shareholder and our perspective on the strategic logic of the combination is unchanged from what we shared previously within Ventures. The portfolio generated 12 million of cash distributions during the quarter, ending with $451 million of cash. That liquidity provides flexibility as we advance our venture separation planning. As a result of our first quarter results and current forecast, we are reaffirming our full year 2026 guidance. And finally, we continue to work to strengthen our balance sheet. Earlier this month, we retired approximately $165 million in term loans at a discount through an unmodified reverse Dutch auction. As a result, we will save approximately $12 million in annual cash interest expense. As evidenced by this transaction, deleveraging remains a top priority. We ended the quarter with total debt of $4.4 billion and total liquidity of approximately $1.5 billion, including total cash of $844 million. We are pleased with our first quarter financial and operational results. Our team is executing with discipline across multiple priorities and we are well positioned for the remainder of 2026. The industry continues to await several important decisions that are now in front of the Federal Communications Commission, while the recent California litigation involving the NEXSTAR TEGNA transaction took up much of the broadcast regulatory headlines over the past few weeks and has introduced some near term uncertainty on timing. We believe the broader environment remains constructive for local broadcasters, and we continue to feel optimistic about the direction of significant issues. Both the FCC and the Department of Justice approved the nexstar acquisition of Tegna with no material conditions, and we remain pleased with the overall deregulatory tone from Washington. I won’t rehash most of those other issues which we discussed on our fourth quarter call in February, but one development is worth noting. In late February, the FCC launched an inquiry into the Sports Media Marketplace examining how streaming exclusives affect consumers, broadcasters and free over the air access. Turning to Slide 5 since the launch of the FCC inquiry on February 25, well over 10,000 comments have been submitted on the FCC’s sports media marketplace inquiry, making it one of the most commented on inquiries in commission history. As every television viewer and sports fan knows all too well, the fragmentation of live sports programming is causing increasing customer frustration with both higher costs and confusion around where the games are televised. With 96 of the top 100 most watched telecasts last year being live sports broadcasts, including record ratings across almost every major sport, this has become an increasingly important topic for both consumers and regulators. Broadcast delivers what no other platform can the widest reach and the lowest cost to the consumer. The numbers make the point. The NFL Thanksgiving game on February drew 57.2 million viewers, the most watched regular season NFL game ever on Fox. The Amazon NFL game the very next day drew only 16.3 million. Same league same week, roughly three and a half times the audience on broadcast. Meanwhile, last year NFL games aired on 10 different services, which according to some estimates could cost a consumer over $1,500 to watch all of the games, even though the large majority of those games aired free over the air on broadcast networks. Live sports is the cornerstone of the broadcast ecosystem. It drives mass audiences and it underwrites the financial model that sustains local television stations and the local journalism they produce. The migration of major sporting events behind streaming paywalls is not just bad for consumers, it risks eroding one of the last shared viewing experiences we all have, and it pressures the very business model that funds local news and community programming. Maintaining broad and free access to live sports should remain a top priority for policymakers as they continue to examine this issue that has clearly struck a nerve with viewers and policymakers across the country. With that, let me turn the call over to Rob to discuss operational highlights in the quarter.
Rob Weisford (Chief Operating Officer and President of Local Media)
Thank you Chris and Good afternoon everyone. Let me walk through our operational performance and how we’re positioned heading into the remainder of 2026. Starting on slide 6, we delivered solid growth in core advertising with first quarter core revenue up 4% year over year driven by the strength in digital and our acquisition of Digital Remedy. Advertisers continue to prioritize platforms that provide scale, interactivity and live engagement, and broadcast consistently delivers on all three. Notably, our NBC affiliates delivered very strong results benefiting from the convergence of major live sporting events. The super bowl was the second most watched telecast of all time in the U.S. the Winter Olympics were the most watched Winter Olympic Games in 12 years on broadcast television, and the NBA continues to deliver solid ratings for the network. While we are underweight NBC, we are overweight Fox, which is our largest network affiliation, and we are already seeing strong demand for the FIFA World cup soccer tournament of Fox. This June and July, notably, 70 of the 104 total matches will air live on the linear Fox broadcast stations, with 40 matches scheduled for prime time. This is exactly the kind of appointment viewing broadcast is built for, delivering mass audience with unmatched reach across the country, our core advertising continues to benefit from Digital Remedy, our programmatic digital advertising platform. As ad dollars increasingly shift across linear connected TV and digital, Digital Remedy allows us to capture demand across all those channels rather than being limited to linear that matters in the political cycle too. Beyond linear, we continue to see engagement growth across podcasts and social platforms. Recent activations like the Tailgate Tour and the Block demonstrate our ability to engage audience beyond traditional broadcast while creating meaningful opportunities for our advertising partners. Our next activation will be at the World cup, hosted by unfiltered soccer stars Landon Donovan and Tim Howard, two of the most capped players in the US national team history. In summary, Sinclair continues to execute well on its core broadcast business. Broadcast’s differentiated role is strengthened in a year like this political and Sports Savvy 2026 with both ratings and subscriber trends showing positive momentum. Turning to Slide seven, Tennis Channel continued the momentum around live sports and delivered an exceptional quarter and a historic month of March. March 2026 was Tennis Channel’s most watched month ever, led by the Indian Wells and Miami Open tournaments attracting record audiences. Miami Open Women’s final between Sabalanca and Goff was the most watched women’s match in Tennis Channel history, breaking a viewership record set just two weeks earlier at the Indian Wells women’s final. In fact, four of the top five most watched matches of all time for Tennis Channel occurred in March as Tennis Channel household viewership increased by 19% year over year in the quarter. In addition, Tennis Channel has hit record D2C subscriber numbers in recent weeks, driven in large part through its recent launch with Amazon prime video. Tennis Channel 2, the network’s fast channel, which launched on Peacock in January, will continue to feature Women’s Day every Tuesday, a programming day exclusively dedicated to women’s tennis, reinforcing our leadership in women’s sports programs. While we remain disciplined on expenses, we are also making thoughtful high return investments to support the long term growth of the franchise, extending our content rights portfolio, scaling our direct to consumer platform and building out Tennis Channel 2 as well as our digital platforms. Tennis Channel is a differentiated premium sports asset and we are vesting behind it accordingly. We are fully bullish on the network. Lastly, we continue to build out Amazing America 250 From Neighborhood to Nation, a multi platform celebration of US history, culture, innovation and community spirit. Programming will expand as we approach the 250th anniversary of our nation’s founding on July 4th. Let me now turn the call over to Dorinda to discuss the first quarter financial results in more detail.
Dorinda
Thank you Rob and good afternoon everyone. Turning to Slide 8, I’m pleased with our first quarter results that reflect strong execution across the business. At the total company level, revenue was $807 million, up 4% year over year. Distribution revenue of $458 million grew 2% supported by lower subscriber churn across key MVPDs and incremental benefit from our partner station buy ins, both of which also contributed to growth in net retransmission revenue. Core Advertising revenue of $305 million also grew 4% reflecting the contribution from Digital Remedy acquisition that closed in March of last year and continued strength in live sports including the Winter Olympics and NFL playoffs. Adjusted EBITDA was $126 million, up 13% year over year. The increase reflects both revenue strength and operating leverage, with operating expenses absorbing the cost base from the Digital Remedy acquisition. While core operating costs remained well controlled in the local media segment, total revenue of $701 million benefited from the same distribution and advertising trends. Distribution revenue of $402 million and core advertising revenue of $261 million both showed modest growth year over year. Segment adjusted EBITDA of $117 million reflects lower programming and production costs, lower network compensation related to prior year station sales, and disciplined SG&A expenses. Within the Tennis segment, Total revenue of $70 million was also up year over year. Adjusted EBITDA of $20 million was below last year’s first quarter reflecting an increase in sales and programming expenses as we continue to invest behind the network’s growth that Rob referenced earlier. Capital expenditures on a consolidated basis are $15 million. Overall. The quarter reflects broad based execution, improving subscriber trends and solid advertising demand across the company. Turning to slide 9 I’d like to provide an update on Sinclair Ventures consistent with the strategy we previously outlined. Ventures continues to shift from passive minority investments towards majority controlled operating businesses with a focus on durable, non discretionary and recurring revenue streams that convert strongly to free cash flow. Ventures generated $12 million in cash distributions during the quarter primarily from the secondary market monetization of one on one minority investment following the $104 million for the full year 2025. These distributions demonstrate our ability to monetize investments while preserving upside in the broader portfolio. We also remain selective on new capital deployment with incremental investments of $6 million in the quarter. Ventures entered the quarter with $451 million in cash and cash equivalents. That liquidity provides meaningful optionality as we advance separation planning and continue to evaluate capital allocation opportunities. Overall, as we advance our work towards a potential separation, Ventures continues to generate meaningful cash while repositioning the portfolio toward greater operational control and long term value creation. Turning to slide 10 as Chris referenced earlier, in early April we settled an unmodified reverse Dutch auction for our term loans retiring $165 million in par value at a discount. The delevering transaction is expected to reduce our annual cash interest expense by approximately $12 million including borrowings under the AR facility. Total Sinclair Television Group or STG debt was $4.4 billion. Our nearest material maturity excluding the AR facility continues to be in December of 2029 at quarter end as defined in our credit agreement, stg net first out first lien leverage was 1.5 times, net first lien leverage was 3.8 times and net leverage was 5.1 times. Net leverage fell by 2/10 of a turn sequentially and these figures do not yet reflect the April term loan retirements that I referenced earlier. We ended the quarter with $844 million in consolidated cash including $392 million at STG and $451 million at ventures including revolver availability. Total liquidity was approximately $1.5 billion. Before turning the call back to Chris, let me briefly frame our first quarter results and outlook in the context of the broader operating environment. When we introduced 2026 full year financial Guidance in February we planned for stable core advertising trends supported by a sports heavy broadcast calendar while remaining appropriately cautious given macro headwinds in certain categories. Since then, given the conflict in the Middle east, the external environment has evolved, consumer sentiment has moved meaningfully lower, inflation expectations have ticked higher, and advertiser visibility in select areas is somewhat more measured than a quarter ago. At the same time, the drivers underpinning our full year outlook remain firmly intact. A record midterm political cycle with competitive races across several of our key markets, the FIFA Soccer World cup anchoring a sports heavy broadcast calendar in the second and third quarters and steady distribution supported by moderating subscriber churn, and expected benefit from our partner station buy ins that are now substantially complete. Based on that balance, we are reaffirming our 2026 full year guidance today. Let me now turn the call back over to Chris for closing comments. Before we open the call to questions
Chris Ripley (President and Chief Executive Officer)
as we wrap up on Slide 11, let me briefly summarize our quarter. First, we continued to execute and build momentum on our core broadcast business. We delivered strong results across the board that translated into meaningful cash generation with stable core advertising trends, audience strength anchored by live sports and improving subscriber churn across key MVPD partners Live sports continues to drive the kind of appointment viewing audiences that no other platform can match. Both the FCC and DOJ are now examining facets of the live sports broadcasting marketplace and we believe they are asking the right …
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