Company Reports

Sinclair's second-quarter results were modestly better than we expected due to more political advertising than we anticipated, and high World Cup viewership and a strong political spending environment also led the firm to increase its full-year adjusted EBITDA guidance.

We expect that pay TV industry headwinds faced by linear television and the continued transition of advertising to digital mediums will result in ongoing challenges for Sinclair.

Sinclair had a good first quarter, with total sales up 4% year over year despite difficult sports-related comparisons, and 1 percentage point of adjusted EBITDA margin expansion. Improved pay TV subscriber churn at the major cable TV providers underpinned 2% distribution revenue growth.

Sinclair had an excellent fourth quarter and expects continued strength in 2026 as it fights the decline of traditional TV. Excluding political revenue, which is virtually nonexistent in off-cycle years, total sales rose nearly 3% year over year, the first quarter of growth in more than a year.

We expect that pay TV industry headwinds faced by linear television and the continued transition of advertising to digital mediums will result in ongoing challenges for Sinclair.

On Monday, Sinclair disclosed an 8% stake in fellow television owner E.W. Scripps. Following this disclosure, E.W. Scripps and Sinclair shares rose 30%-40% and 5%-10% respectively.

Sinclair's third-quarter earnings were uninspiring but largely in line with management expectations. Distribution and advertising revenue declined by low-single-digit percentages, but fourth quarter and 2026 guidance painted a slightly improved picture.

Nexstar and Sinclair have both chosen to preempt Jimmy Kimmel Live indefinitely in response to the show's return on Sept. 23. They will instead air local programming during the show's time slot.

We expect that pay-TV industry headwinds faced by linear television and the continued transition of advertising to digital mediums will result in ongoing challenges for Sinclair that lead its business to decline.

Sinclair's second-quarter earnings painted a meager picture. Top-line metrics fell just below guidance, though cost constraints provided a bottom-line adjusted EBITDA beat. Revenue of $784 million decreased 5% without the boost from political advertising.

Sinclair Broadcast Group's first-quarter results were uninspiring, falling within management guidance, but exhibiting continued advertising weakness. Total reported revenue fell 3%, but total revenue excluding political ads was still down 0.5%.

No-moat Sinclair reported fourth-quarter results in line with management’s guidance for the quarter, concluding a largely positive year for the firm. Sinclair achieved record political advertising revenue and successfully renewed 80% of its carriage agreements with pay-TV providers. While 2025 should be weaker given the absence of political revenue, potential regulatory tailwinds could benefit the industry and Sinclair. Despite this, we still believe declining pay-TV viewership limits the growth potential for the firm. We are maintaining our $14 per share fair value estimate.

We expect that pay-TV industry headwinds faced by linear television and the continued transition of advertising to digital mediums will result in ongoing challenges for Sinclair that lead its business to decline.

No-moat Sinclair reported generally positive results, as third-quarter record political ad revenue grew 40% from 2020 despite the firm falling short of its aggressive guidance on multiple metrics. Despite a potential slowing in cord-cutting following the continued bundling of streaming services inside the Pay-TV ecosystem, we still think Sinclair is facing significant headwinds given its lack of ownership of the content it broadcasts. After adjusting our model for higher expectations for political revenue in presidential election years, we are raising our fair value estimate to $14 from $12.

We expect that industry headwinds faced by linear television and the continued transition of advertising to digital mediums will result in ongoing challenges for Sinclair that lead its business to decline.

No-moat Sinclair showed improvement in the second quarter as media revenue met and adjusted EBITDA exceeded management’s guidance. While Sinclair benefited from $40 million in political advertising revenue during the quarter, the firm has also seen other headwinds abate. Accelerated retransmission revenue growth (4%) was driven by favorable distribution agreements the firm has signed over the past six months. Additionally, the rate of decline in core advertising improved, to negative 1% from negative 3% last quarter, as advertisers have slowly increased ad budgets. While economic concerns have emerged recently, management is cautiously optimistic in its outlook for the second half and raised full-year expectations. Though this outlook is positive, we had expected these improvements, given a competitive election cycle. We are maintaining our $12 fair value estimate.

No-moat Sinclair posted mostly positive results to start a critical year for the firm. The return of political advertising resulted in revenue increasing 3% year over year to $727 million and adjusted EBITDA expanding to $105 million from $92 million, exceeding management’s guidance. Despite the top and bottom-line improvement, we expect distribution and core advertising revenue growth to remain elusive. We are maintaining our $12 fair value estimate.

Sinclair ended 2023 on a sour note. While results met the low end of our expectations and key metrics trended up in the quarter, the litigation settlement with Diamond Sports Group resulted in negative EBITDA and net income. The settlement shouldn’t affect future operating results, but we also don’t think the positive underlying trends will continue. Nonetheless, Sinclair should greatly benefit from record political spending in 2024. We are lowering our fair value estimate to $12 from $13 for no-moat Sinclair to reflect slightly slower growth expectations.

We expect that industry headwinds faced by linear television and the continued transition of advertising to digital mediums will result in ongoing challenges for Sinclair that lead its business to decline.

Sinclair announced the resolution of claims by Diamond Sports Group against Sinclair as a part of DSG’s bankruptcy and reorganization. In July 2023, DSG filed suit against Sinclair seeking $1.5 billion for alleged misappropriation of funds from Diamond prior to its bankruptcy filing. Sinclair has now agreed to pay DSG $495 million in cash, which will result in an estimated post-tax net cost to Sinclair of $250 million-$325 million. We previously believed DSG would provide no value for Sinclair, but we also didn’t expect Sinclair would be forced into this large a settlement. We are reducing our fair value estimate to $13 from $15.