Sinclair Reports Weak Third Quarter; RSNs Likely Hindering Dish Renewal

Sinclair posted a weak third quarter as revenue and operating income both missed versus FactSet consensus. Despite the miss, the firm made some progress on the regional sports network front with three multiyear renewals with teams and a full-package renewal including the RSNs with Altice. We remain skeptical about the direct-to-consumer service for the RSNs, particularly with respect to the response from distributors. While management noted that customers will pay a retail price versus the lower affiliate fee, we think that distributors may start moving RSNs off the standard tier and onto either higher tiers or add-on packages. We are maintaining our no-moat rating and our fair value estimate of $30.