Sinclair, Inc. (SBGI) Q3 2026 Earnings Report, Transcript and Summary

Greetings. Good day, ladies and gentlemen, and welcome to the Sinclair Third Quarter 26 Earnings Conference Call. At this time, all participants are on a listen-only mode. The question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference. Please note this conference is being recorded. Will now turn the conference over to your host, Christopher C. King, Vice President of Investor Relations. Sir, the floor is yours.

Thank you. Good afternoon, everyone, and thank you for joining Sinclair's third quarter 26 Earnings Conference Call. Joining me on the call today are Christopher S. Ripley, our President and Chief Executive Officer; Narinder Sahai, our executive vice president and chief financial officer and Robert D. Weisbord, our chief operating officer and president of local media. Before we begin, I want to remind everyone that slides 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 web 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 third 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. These measures are not formulated in accordance with GAAP, and are not meant to replace GAAP measurements, and may differ from other companies' use or formulations. Further discussion and reconciliations of the company's non GAAP financial measures to comparable GAAP financial measures can be found in the company's third quarter earnings release. 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 Christopher S. Ripley.

Thank you, Christopher, and good afternoon, everyone. Let me begin on Slide 3. Sinclair delivered another strong quarter of results with political revenues of $136 million during the quarter, up 55% versus the third quarter of 22 which was the last midterm election cycle. For the quarter, total revenue was 893 million, up 16% year over year while adjusted EBITDA was $213 million more than doubling last year's amount. Growth was led by political advertising and that continued strong pace of demand was seen through yesterday's election with our final political revenue figure expected to be approximately $455 million for the full year well ahead of all our prior forecasts. Distribution revenue continued to grow supported by partner station buy ins completed over the past year. Tennis Channel continued to deliver strong growth with core revenue up 21% year over year, while seeing continued growth in our D2C subscriber base. AMP Media also saw strong growth on increasing demand across all our social products, including our new podcast partnerships with key advertisers. Before turning the call over to Robert to cover our strong political results, I did want to provide an update on our strategic review process. Which we originally outlined in August of last year. We continue to evaluate various broadcast transactions and while pleased with some of the progress we have made so far, believe opportunities still remain. Have also evaluated the separation of the Ventures portfolio through a spin off split off, or other transaction and have determined at this time not to separate ventures on a stand alone basis. However, larger broadcast combinations that could include a spin-merge are still an opportunity. We will continue to evaluate all options that provide value creation for the company's shareholders. Narinder will provide some additional details a bit later. But for now, let me turn the call over to Robert to run through our political results.

Thank you, Christopher, and good afternoon, everyone. Turning to slide 4, 26 midterm election cycle. Delivered strong results across the country for us. As we expect to book approximately $455 million in political revenue for the year following yesterday's midterm elections. This represents a 12% growth versus 24 presidential election cycle and a 37% growth versus the last midterm cycle in 2022. Of note, this compares quite favorably to our initial guidance provided in February of at least $333 million as well as our updated guidance in August of at least $375 million To touch on 2 topics briefly, we believe that political crowd out was certainly evident in our numbers. But also manage given core trends. Also, we did not experience a meaningful impact from the Lowest Unit Rate growing by the various courts. Including the Supreme Court, which updated the FCC's authority to allow political parties to enjoy the same LUR protection that has been historically granted just to the candidates themselves. We believe that any pricing adjustments that were made as a result of the LUR were offset by the increased demand coming from the parties. We believe this political environment bodes well for the upcoming 28 election cycle, which will be here before we know it. Notably, 2028 will represent a dual open primary in both parties for the presidential nominations. So we expect early and aggressive spending as both parties will want to introduce a new name nationally. While our footprint is well positioned throughout many battleground states, we also believe that the entire broadcast sector did well during the election cycle. Given recent management commentaries and industry forecast. This provides evidence once again of local broadcast television being a key delivery platform for political advertising. Sinclair has a proven track record of strong local news operations that support the ability to deliver knowledgeable independent voters. Which can be seen in our political revenue results discussed today. In addition, I wanted to touch on the continued strong viewership levels being seen in NFL broadcast. Through week 7, total NFL viewership is up 4% year over year averaging 18.4 million viewers. The highest viewership level through the first 7 weeks of the season in over a decade. In fact, NFL games rank as the top 40 shows on television since the start of the 2026 season. More than 203 million Americans have watched the NFL so far this season, according to Nielsen Media Research. And the NFL is not the only sport with record viewership. As total college football viewing is up 2% over last year's record high pace according to Nielsen. Broadcast position is the prime outlet for appointment-viewing windows, particularly with live sports, remains more dominant than ever. And we are delivering the results. Now let me turn the call over to Narinder to run through our financial results.

Thank you, Robert, and good afternoon, everyone. Turning to slide 5, I will walk through our third quarter results. Total company revenue was $893 million up 16% year over year. Driven primarily by political advertising and continued modest distribution revenue growth. Adjusted EBITDA was $213 million up 113% reflecting strong political revenue and disciplined expense management. Political advertising revenue of $136 million was the largest contributor to growth. Up 55% from the third quarter of 22. Distribution revenue increased 1% supported by continued moderation in subscriber churn and the benefit of partner station buy ins. Core advertising revenue declined 4% reflecting political crowd out and continued caution in a handful of cost-pressured, consumer-facing categories that fuel volatility and broader inflation that are squeezing advertisers' budgets. In local media, revenue was $789 million up 18%. And adjusted EBITDA was $205 million up 123% driven by strong political revenue. Tennis Channel revenue was $71 million up 6%. Core advertising revenue increased 21%. And distribution revenue increased 2% supported by continued direct to consumer subscriber growth. Tennis Channel's adjusted EBITDA was $15 million down approximately $1 million primarily reflecting higher programming and production costs and continued investment in our direct to consumer platform. Turning to slide 6, we continue to make meaningful progress on deleveraging. During the third quarter, we repurchased and retired $25 million base amount of our B7 term loan at a discount and repaid and terminated the remaining B3 term loan balance further reducing our cash interest expense. At quarter end, total debt was approximately $4 billion with no material maturity until December 2029 excluding the accounts receivable facility. Sinclair Television Group or STG net leverage was 5.1x down from 5.2x last quarter and 6x a year ago. We ended the quarter with $659 million of consolidated cash and cash equivalents including $170 million at STG, and $489 million at Ventures. Including undrawn revolver and A/R facility capacity, total liquidity was approximately $1.4 billion. Year to date, we have repaid or retired approximately $355 million of debt principal. We will continue to manage our maturity schedule carefully and reduce the total amount of debt outstanding. Deleveraging remains our top capital allocation priority while maintaining ample liquidity and investing selectively where returns are attractive. As Chris mentioned, we have determined at this time not to separate ventures on a standalone basis. Let me add a couple of points on what that means for capital allocation. First, Broadcast free cash flow remains dedicated to reducing debt at STG. And second, ventures will continue to monetize minority positions redeploy capital into return seeking investments, and continue to invest in the growth of Tennis Channel and Digital Remedy. Turning to slide 7, we are raising our full year 2026 guidance on the strength of political revenue and continued cost discipline. Full year political revenue is now expected to be approximately $455 million versus our prior guidance. Of at least $375 million That is a record political year for Sinclair achieved in a mid term cycle. Higher political revenue brought somewhat more crowd out so we have narrowed all advertising guidance to $1.22 billion to $1.25 billion within our prior range. We have also narrowed distribution revenue guidance to $1.74 billion to $1.77 billion with the midpoint unchanged reflecting more certainty as we approach year end. Consolidated adjusted EBITDA guidance is now $825 million to $835 million up $85 million at the midpoint. Political is the largest driver, but not the only 1. The increase is larger than the step up in our political outlook and reflects continued cost discipline across the business. Consolidated total revenue guidance is now $3.53 billion to $3.6 billion, up $95 million at the midpoint. Capital expenditures net interest expense, and net cash tax guidance are unchanged. We will provide full year 2027 guidance with our fourth quarter results in late February. In the meantime, let me offer a few early thoughts on the building blocks for 2027. On core advertising, thousand and 27 will not have the benefit of the Olympics or the World Cup. There is some uncertainty around the MLB season given the ongoing labor negotiations. And we remain mindful of the macro backdrop. At the same time, the inventory that political occupied this year frees up for core. And our digital cross platform and podcast businesses continue to grow. On distribution, subscriber churn continues to moderate, both in our numbers and in what the largest distributors are reporting. Our new ABC and CBS affiliation agreements are in place Our Fox renewal is in December. And a significant portion of our MVPD subscribers come up for renewal next year. We will also have full year effects of the Saint Louis affiliation change and the Charter Cox combination. And as an odd year, 2027 will, of course, reflect off cycle political revenue. On cost, you can expect us to build on the discipline you have seen in 2026. And we expect capital expenditures to be broadly in line with 2026 level. With that, let me turn the call back to Christopher for closing comments before we open the call for questions.

Thanks, Narinder. We are very pleased with the strong political revenue results this year as the demand for political advertising time exceeded our expectations in almost every contested state. We believe this continues to demonstrate not only Sinclair's ability to attract significant political dollars due to our strong local news operations, and our ability to deliver undecided viewers, but also the industry's strong positioning as the ongoing leader political advertising. Obviously must wait and see how other media players did over the coming days but it certainly appears that local broadcasters are likely to have at least maintained, if not grown, our overall market share of political advertising. I wanted to wrap up briefly by touching on our ongoing market optimization efforts. While we believe in transformational M&A for the broadcast industry, We have also been continuing our ongoing strategies to optimize our station portfolio. We have acquired stations in various markets from other broadcasters, as well as our JSA station partners throughout this year. And we believe the potential for larger station swaps with other broadcasters is significant. We remain encouraged by the broader regulatory environment for the industry and we anticipate additional station optimization transactions over the coming months and we look forward to keeping you updated on our progress. Thank you for joining us today and your interest in Sinclair. Operator, we will now open the call for questions.

Thank you. At this time, we will have our question and answer session. If you would like to ask a question, please press 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press 2 if you wish to remove your question from the queue. And for participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. 1 moment, please, while we poll for questions. Thank you. Our first question today is coming from Dan Kurnos with StoneX. Your line is live.

Great. Thanks. Good afternoon. Christopher, I am going to frame it this way. I applaud you guys for making the decision-- a difficult decision to-- you know, not stand alone spin ventures at this time. I think that is probably in line with what the market was looking for. And I guess, just more color on the decision or the thinking as to how you arrived at that decision. And I know that Narinder, in his own remarks, gave some color around sort of the cash flow, but you do have a lot of cash sitting there. That could, in theory, be used for debt pay downs. So just any view on willingness to put that back into sort of the broadcast side of the equation, number 1? And number 2, Narinder, talked about, you know, the renewals on the reverse side. We have been waiting to kinda get an update at the end of the year from you guys on how to think about longer tailed net retrans. So just any initial thoughts or color that you could give us post those renewals would be super helpful. Thank you.

Sure. Thanks, Dan. So, look, in terms of our evaluation, you know, certainly on paper, separating out ventures would create value, but it would also reduce strategic flexibility. And so, we concluded that we would not spin on a stand alone basis, but a spin-merge is still a priority. And as Narinder mentioned in his remarks, you know, the cash adventures are still going to be used to find return maximizing investments. In terms of renewals on networks, I think was your next question. Right? We have just completed renewals with ABC and CBS. And we are actually in negotiations currently with Fox. And furthermore, pretty much every 1 of our major MVPDs is up between the end of this year and, you know, the 12 months after that. So there are a lot of moving pieces, you know, all we think very positive for the company. You know, first, I will start with the networks. You know, there is something I often talk about, but I will repeat again, is that the payments that we give to the networks need to be rebalanced vis a vis what the monetization is on streaming. And, you know, since our last renewal, round, all of the networks now have streaming platforms, including Fox. And there needs to be a rebalance between how much is paid for this content by the streaming side of the house, so to speak, and within the linear side. And so that is the core sort of issue at hand, and I think we are having very good success, bringing that to the networks, in those negotiations. And in terms of our MVPDs, which are up in 2027, by and large, you know, we have a very, I think, positive story there, but that is gonna have to play out, you know, over the course of the year. Got it. Thanks, Christopher, and congrats on the strong results.

Thank you. Thank you. Our next question is coming from Aaron Watts with Deutsche Bank. Your line is live.

Hey, everyone. Thanks for having me on. Questions, if I may. The first on core advertising with the election behind us. Can you talk a little bit more about what you are seeing from the environment, the remainder of this year and into early 27? Maybe you can highlight some key verticals, including auto and how they are trending given the persistent high fuel prices, lingering macro uncertainties, etcetera?

Yeah. Jason, this is Robert. With auto, it trended, stable in third quarter. it is down slightly right now going into fourth quarter. With the auto prices and the cost of goods. So we are keeping an eye on that. As Narinder did mention, we will have a plethora of spots that are available going into next year that were absorbed by political and issue spots. And right now, we are finding out our plans on how to absorb that through unique programs. So we expect to rebound, but traditionally, what we have to do is go back to the advertisers that were crowded out and encourage them now that the election's over to come back to broadcast. There is some pressure sensitive such as medical, legal, and food that we are seeing. Some declines in due to the pricing and the high prices in those categories. And, again, so we are keeping our eye on that. But, again, we know the dilemma that is in front of us, so there is some strategic plans. To generate revenue with core advertisers, but not just solely relying on the spot business.

Thank you. That. that is helpful. And then 1 more question if I could. Maybe towards Narinder. You paid down over $200 million of debt in 2Q, a much smaller denomination this quarter. As political cash lands, What should we expect going forward in terms of opportunistic debt repayment? And sorry if I missed this, but did you say if there were any updated thoughts around the cash adventures and whether that could go towards debt repayment as well? And how do you think about prioritizing certain pieces of your debt?

Yeah. Jason, thanks for the question. So as I mentioned in my remarks, so political cash is, you know, has just come in. And the cash that comes in at STG or the broadcast business, a significant majority of the cash is earmarked for reducing leverage and for reducing debt. Obviously, you know, not at the expense of, you know, continuing to invest in the business. You know, attractive return opportunities where they exist. So we will continue to do that. But a great majority of that cash at broadcast is going to go towards strengthening the balance sheet. As far as, you know, ventures is concerned, I think we just mentioned to you stand alone separation is off the table. There is a significant amount of cash that is sitting there. And that cash, you know, helps us have some optionality around a large scale broadcast transaction. Right? And also, Ventures is going to continue to monetize its minority investment positions with more cash on the balance sheet, and then deploy that cash into the growth of Tennis Channel and Digital Remedy. As a reminder, those businesses, you know, sit in ventures And then also go out and seek return seeking investments. You know, whatever they might be. So that is, you know, that is the current thought process. That we have outlined, and I hope, you know, that lends sufficient clarity on how we are thinking about capital allocation. Very helpful. Thanks as always for the time.

Thank you. Thank you. Our next question is coming from Steven Cahall with Wells Fargo. Thank you.

Christopher, it seems like the industry has gone kind of quiet on M&A discussions. And my guess is that is because everyone's been, you know, raking in political money and trying to get that on the balance sheet. You all have been probably the most proactive. Is your expectation that as we get into 2027, conversations will restart with maybe the shot clock starting to tick down a little bit on the FCC? What do you think needs to happen for the bid ask or the buyers and sellers to start to come together that has not happened so far? And then just a question on Spectrum. It seems like if the FCC can move to sunset ATSC 1.0, there could be a little more optimism about the potential to use excess broadcast spectrum. I was wondering if you have been involved in any efforts for that or if you see any other opportunities to generate value for the industry in the relative near term on Spectrum and what seems like a pretty accommodative FCC? Thank you.

Great. Thanks, Steven. So look. On the M&A front, there is, already a lot of activity at least over here at Sinclair, around market optimization. In addition to our partner station buy in we have acquired 3 different in-market station groups over the last 12 months. And we have many more in our pipeline across multiple counterparties within the industry. So I would say that side of the market is pretty constructive. And the types of synergy opportunities that we are seeing are very significant. And so you know, that part of the market is already very vibrant and sort of the recent regulatory actions at the FCC have certainly facilitated that. In terms of larger deals, we are certainly ready and willing and able to jump on larger deals. I think there will be a constructive environment for that once we see a resolution to the Nexstar TEGNA situation, I do think that is out there as preventing some people from moving forward in a more, you know, constructive way. But otherwise, the regulatory environment right now is as good as it is ever been. And, you know, we are looking forward to not only market optimization, opportunities like I mentioned, but the larger deal market freeing up here shortly. In terms of the spectrum side, look. I think the way I see our spectrum is that there are 3 buckets Of monetization for our spectrum. Number 1 is, of course, our core business of providing video. And, you know, ATSC 3.0 will allow us to provide better pictures, better sounds, modern experience, interactive features, more content, enhanced consumer experience, and we are already rolling some, you know, that out in the 3.0 markets that we have, and the final completion of transaction, I think, will be really great for, our consumers and our core business. And by the way, on a monetization front, not only will our consumers be happier, but we will open up new areas of monetization through those interactions features and through dynamic ad insertion capabilities. The second bucket of monetization is data casting. And that is what EdgeBeam was formed to work on They are making great progress in areas like enhanced GPS digital signage, automotive. And you know, that is going to be a market that will continue to develop over time. it is a new endeavor, so it does take a ramp. And it will be greatly facilitated by additional spectrum being made available in the new transition to 3.0 finally be completed. And then the third bucket is something that, you know, there is been a lot more talk about recently. Is leasing the spectrum to wireless or satellite players. And, I think that is also an opportunity which will be available for the broadcasters on a go forward basis. And you know, now that we have finished the midterms, and as an industry, we have largely achieved our objective from a regulatory perspective on the ownership front. The next big priority for our industry is completing the 3.o transition. And there is an NPRM in front of the FCC which, seeks to do that. And we are looking forward to working constructively with Chairwoman Carr to figure out the final form of that and get 3.0 through the final transition and open up these 3 monetization streams. Thanks.

Thank you. Thank you. Our next question is coming from Benjamin Soff with Deutsche Bank. Your line is live.

Good afternoon, everyone. Thanks for the question. Obviously, strong results on the political side. I was wondering if you could spend a bit digging into the different fundamental drivers there. Where we saw that performance coming from, and what are your key takeaways from this as we think about 2028? And then could you remind us what the growth initiatives are you working on for Tennis Channel and how that business fits into your broader portfolio strategically. Thank you.

Alright. Well, I will speak a little bit about the first question around what drove our results. And then I am going to pass it off to Robert to speak more about, you know, political. Because, obviously, political, you know, massively exceeded our expectations. It exceeded the midterms. But also, you know, underneath we had several other levers being pulled here at Sinclair A 1 was improved churn largely driven by Charter and DIRECTV. And so those 2 very large MVPDs have improved their performance, and so, that helped out this year. We also have, completed several big projects, here at Sinclair, like our cloud transition and other projects, you know, beyond that have come to a close or have been transferred to other companies. Like EdgeBeam, for instance. And so there is been a quantum of expense that has, you know, extra expense that has been naturally eliminated. And then we have, been, as Narinder has alluded to many times, been very disciplined on the cost side. Taking out you know, duplicative and, and unnecessary cost using the latest technologies like AI to, you know, enhance our workflows. Our workflows And, and also we had the M&A this year, although it is been on a small market optimization front. Side. It has had a cumulative, very positive impact in 2026 including our JSA buy ins and those 3 different, markets, that we transacted on in over the last 12 months. So I will turn it over to Robert to speak a little bit more about you know, political, which is, of course, the big story and I think a really great read through for what is going to happen in 2028. But, Robert, do you want to say a word on that, and then I will cycle back on your tennis question.

Yes. We were positioned nicely in a lot of contested races. Senatorial, 38% of the political spend came from the back of that category. While 62% came from the issue pack side of things. And so again, it is a lot of heavy work on the station and our national team dealing with the volume. But you have to be able to price it. You have to be able to run it. And so as Christopher indicated, it sets us up well for, the open presidential seats and coming out of these races, the Republicans are gonna look to rebound. And why we believe the money still flows to broadcast is the fact that we are able to give coverage of all the issues We are able to give unbiased, interviews with all the candidates running. And the officials getting elected is exactly where we are positioned in the marketplace because our people live where they work. And, it still shows the resiliency of the reach and statute still of local broadcasters.

So to address tennis, it. Look. We are very pleased with the trends that we are seeing at tennis, as was mentioned, their core advertising. In the quarter was up 21% year over year. Distribution revenue was up 2%, you know, driven by D2C subscription growth. So, you know, there is. there is a lot of good trends going on at tennis. From an industry perspective, but also from a company perspective. So, you know, industry perspective, interest and participation in tennis continue to increase post COVID. So COVID sort of you know, reignited the industry as it did or the, you know, the sport, if you will, as it did, several other sports, and that momentum continues you know, through to today. And, just to give you a flavor, you know, that the call year Tennis Channel has been setting new rating records on its cable. it is linear cable channel. So, you know, there are not too many cable channels that I am aware of that are actually growing audience across all key metrics, and Tennis Channel is a standout in that regard. Q3 ratings increased across all key demographics. The Cincinnati Open, which was this summer, became Tennis Channel's most viewed tournament ever. And August was Tennis Channel's most watched month ever. So. And not. So that is just kinda core linear channel strength. But then on top of that, you have Tennis Channel 2, which is a free ad supported channel that continues to grow in terms of audience, and distribution. it is not fully distributed yet, but it is on many fast platforms. it is on various cable platforms. it is on YouTube TV, and then, you know, we will continue to expand its distribution over time. But you know, the types of increases you are seeing on that channel you know, are double-digits in terms of audience flow. So that is. it is a whole new linear channel that is fueling growth. And then you have got social and digital outlets, which are seeing tremendous growth in the double digits in terms of traffic and interesting engagement. So with our new leader over there, Jeff Blackburn, he is re-architecting the entire digital infrastructure at Tennis Channel from the website and culminating with new apps that we are going to be delivering in December. So we will be, you know, in house on those apps free from third party vendors and controlling our destiny there with a vastly superior product quicker iterations, AB testing, the ability to you know, iterate our product in a much faster way So to really understand tennis from a you know, high level, The biggest opportunity was within tennis, beyond just the core growth that I described. Is the ramp up of streaming. And we have the new app-- with the new apps coming and having all of our now available direct to consumer, there is a tremendous opportunity to ramp up subscribers on the streaming side. So we are investing-- it is certainly the company is in investment mode. Investing in content. it is investing in technology. it is investing in marketing for subscriber acquisition. So that is why you are seeing you know, the profitability do what it is doing, but the top line is growing very nicely, and the trends are very positive there on tennis.

And I would add we are building on the culture of the sport. Where we bring the desk and talent to all the Masters 1 thousands and some of the 500 events along with 2 majors, the US Open and Roland-Garros. And having our talent doing live interviews where the fans are there watching in the background. Allows them to touch and feel outside of the live play. And that is part of the strategy of building the culture both on our social platforms as well as live events. that is helpful. Thank you.

Thank you. Our next question is coming from David Karnovsky with JPMorgan. Your line is live.

Hi. Thank you. Maybe just a few more on sports. Maybe just first for Narinder. I do not know if you can frame the cyclical benefit from the Olympics and World Cup in 2026. And then to the extent there is no MLB season, which I guess is a possibility, is this mainly an advertising impact to Sinclair? Do your retrans agreements require any kind of game delivery minimum? And then separately, Christopher, we saw intra-quarter a letter from a lobbying group To advocate for sports distribution on streaming. Just kind of curious where you think regulators' heads are on kind of items like the Sports Broadcasting Act. Thank you.

Okay. Why do not I. I will answer the question first, and then I will throw it over to Narinder on your first question. So. But just in terms of no MLB season, does it impact distribution agreements No. We do not have any. there is no there is no impact to our MVPD agreements. There are no, covenants that require us to have a certain number of MLB games, for instance. So no concerns there. And, and then in terms of the sports broadcasting act, and regulators, you did see, earlier this year a hearing on that. I think it was quite clear that lawmakers see the broadcasting act as being, you know, purposely drafted to, exclude or grant antitrust carve out to the leagues. Only as it relates to broadcast. And that was made clear in those hearings, and it also was made clear when college came around and tried to get the same items pushed through on legislation, they were going to have to live with the same carve out only as it relates to broadcast. And so we were very, you know, pleased with that outcome of, you know, all that piece of legislation never went through. But that is the way it was drafted. And it just reinforces that from a rules of the road perspective, these major sports are supposed to be engaging with broadcast on a collective basis. And it is better for their business. it is better for the consumer. You know, there is a fundamental sort of access to content point when it comes to sports that I think is very much hits home with lawmakers. And that is why the law is drafted the way it is.

Yeah. On the first part of your question, I will answer it a little bit more broadly. On how we are thinking about core advertising. As you know, 2027 is gonna be a tougher, you know, comp year, not just because, you know, political rolls off, and that is obviously impacts core to the extent there is crowd out. And then the core kind of bounces back. But then tougher comp because you do not have the benefit of the Olympics, or the World Cup, as I mentioned. there is some uncertainty around the MLB season. And that is mostly the impact is on the advertising side of the house. it is quite possible that the MLB negotiations get you know, pushed out to 2028. So we will just have to kinda wait and see. You know, what happens there. David. So I think net, there are, you know, some things to in mind as you are thinking about, you know, 2027, you know, have core advertising. There are, you know, several puts and takes here. On the plus side though, you know, our digital business continues to grow. We continue to make, you know, good progress on cross platform and podcast businesses. So those are some of the, you know, puts and takes you kind of have to keep in mind. But as far as, you know, MLB goes, the main impact is gonna be on the core advertising. Thank you.

Thank you. As a reminder, ladies and gentlemen, if you do have a question, please press Our next question is coming from David Hamburger with Morgan Stanley. Your line is live.

Thank you. Christopher, could you elaborate on subscriber churn? I think you had alluded to some improvement and we have seen, you know, some of the video numbers from Charter. Just curious, you know, historically, it is at mid single digit churn had been the norm. I am wondering if that is improved. And if you can kind of paint that against the backdrop of, you know, distribution revenue was up 1% year over year. How do you think about the trajectory and what is, you know, as you have all the renewals next year, we have seen a lot of blackouts as well. Just if you could kinda elaborate maybe a little bit on how you are approaching those discussions.

Sure. So, look, overall churn is in the mid single digits. It has improved on the traditional side. Mainly, as I said, related to the improvements at Charter. But also DIRECTV has been doing better, especially when you look at DIRECTV combined with DIRECTV Stream. And we are seeing the rest of the MVPDs start to take notice as to what Charter is doing. And, start to pursue similar strategies. So, you know, we are very heartened by that. We think, the charter strategy is the right strategy. It gives the consumer a ton more value when you net out all the streaming platforms that are put into the base offering or the, you know, expanded cable offering from Charter, it makes the cost of legacy cable, which is the broadcast networks and some cable channels, about $30 a month. So it is a huge change from, you know, a $100 a month, which is where it was you know, a couple years ago, And we hope everyone will follow Charter's lead, and by the way, they just bought Cox, and so they will be rolling out the same packaging on Cox's subscriber base very shortly here. And so it is a strategy that works it is helping us. it is helping the industry. And it is having, an impact. On churn. And as it relates to know, our gross line, as it is. We were up 1%. I think what is notable there is that we did not have any major renewals this year. And you know, the only thing that really helped us along was the JSA partner buy ins. And, and we were still, I think, we are. So we are pleased with the outcome there, not having any renewal step ups. As we go into next year, you know, we will have you know, quite a few negotiations, pretty much all the major traditional MVPDs will be negotiating with over the span of next year. And so that should bode well for us. You know, that generally means bigger increases in the initial renewal And you know, we have been able to navigate our last set of renewals, I think, in 2024 where we had another you know, big session of renewals. And even 2021, you know, we have not had a single blackout through that period. So in fact, I think our last blackout, you would have to go even back further beyond 2021. So yeah, I hear there has been there has been blackouts for other broadcasters and we kind of always get this question. But we have you know, a very constructive process with the MVPs. They are our partners. And our most important partners. And, you know, we have very valuable content that they need to operate their systems. And we are not concerned about you know, blackout risk.

If I could just ask, could you talk about the vMVPDs? I think we have noticed a little bit of a deceleration for them. Is that impacting some of your numbers as well?

So, look, I think it is fair that the virtual MVPDs are not growing quite as fast as they were, but they are still growing. And then on top of that, we also get paid for things like Peacock and Paramount Plus and FOX Nation. And so there are other sources of growth on the sort of virtual side, if you will, if you, like, lump those other platforms in there. And also for us, the most important trend is the traditional side. that is where we get paid the most. Thank you very much. Thank you.

Ladies and gentlemen, this will conclude our question and answer session. I would now like to turn the call back over to Mr. Ripley for any closing remarks.

Thank you all for joining us on our Q3 earnings call. To the extent you have any questions or comments, please do not hesitate to reach out to us. Thank you.

Thank you. Ladies and gentlemen, this does conclude today's call. You may disconnect your lines at this time, and we thank you for your participation.