Slightly Better than Anticipated Q2 for Sinclair; RSN DTC Service Could Hinder Affiliate Fee Growth

Sinclair posted a slightly better than expected second quarter as our worries about the regional sports network segment persist. Revenue for the second quarter came in line with FactSet consensus, but adjusted EBITDA beat expectations. The firm’s acquisition of the Fox RSNs did bring diversification to the business but also came with carriage worries as we expect that Dish will continue to eschew the RSNs. The recent rumor about a potential acquisition by Sinclair of the NBC Sports RSNs from Comcast is a worrying sign that management may be looking to chew off more than they handle. We are maintaining our no-moat rating and our fair value estimate of $30.