Q3 2023 Sinclair Inc Earnings Call
Good day, everyone and welcome to Sinclair third quarter 2023 earnings Conference call.
At this time, all participants have been 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 turn the floor over to your host Kris King Vice President of Investor Relations, Sir the floor is yours.
Thank you good afternoon, everyone and thank you for joining <unk> third quarter 2023 earnings conference call.
Joining me on the call today are Chris Ripley, our President and Chief Executive Officer, <unk>, <unk>, Our executive Vice President and Chief Financial Officer, and Rob Why Ford, our Chief operating officer and President of globally.
Before we begin I want to remind everyone that slides and supplemental information for today's earnings call are available on our website SPG I dot net on the Investor information page and on the earnings webcast page.
Certain matters discussed on this call may include forward looking statements regarding among other things future operating results such statements are subject to a number of risks and uncertainties actual results in the future could differ from those described in the forward looking statements as a result of various important factors such factors have been set forth in the company's most recent report.
<unk> has filed with the SEC and included in our third quarter earnings release. The company undertakes no obligation to update these forward looking statements.
The company uses its website as a key source of company information, which can be accessed at www dot SPG our dot net.
In accordance with regulation FD. This call is being made available to the public a webcast replay will be available on our website. We will remain available until our next quarterly earnings release.
Included on the call will be discussion of non-GAAP financial measures, specifically adjusted EBITDA adjusted free cash flow and leverage the company considers adjusted EBITDA to be an indicator of the company's operating performance and the ability to service its debt. The company also believes that adjusted EBITDA is frequently used by industry analysts investors and lenders as a measure of.
Valuation and ability to service debt.
The company also discloses segment adjusted EBITDA as an indicator of the operating performance of its segments in accordance with ASC to Ats segment reporting the company considers adjusted free cash flow to be an indicator of the company's operating performance. The company also believes that free cash flow is a commonly used measure evaluation for companies in the local media industry.
In addition, this measure is frequently used by industry analysts investors and lenders as a measure of valuation for local media companies. These measures are not formulated in accordance with GAAP are not meant to replace GAAP measurements and may differ from other companies uses or formulations. The company does not provide reconciliations on a forward looking basis further.
<unk> and reconciliations of the company's non-GAAP financial measures to comparable GAAP financial measures can be found on our website at www Dot <unk> dot net.
Any discussion of pro forma numbers as compared to 2022 will exclude diamond, which was de consolidated March one 2022, and any business sold since the beginning of 2022 for actual results, including the periods. The Diamond was consolidated please refer to this afternoon's earnings release. In addition, due to the pending Diamond litigation we are unable.
To comment on any specifics regarding the legal issues surrounding diamond bankruptcy or any potential financial impact that may or may not occur as a result of those matters other than to say that Sinclair firmly believes it has meritorious defenses to the allegations in the Diamond law suit and we plan to vigorously defend against them.
Let me now turn the call over to Chris Ripley.
Good afternoon.
And thank you for joining us I'll start on slide four by introducing an overview of our third quarter financial results.
As you can see Sinclair delivered strong third quarter results that met or exceeded our guidance expectations across the board on both advertising and distribution revenues as well as media expenses in both our local media in tennis channel segments. As a result, we exceeded the midpoint of our adjusted EBITDA guidance for the quarter by 40%.
And we also exceeded adjusted free cash flow guidance.
Turning to slide five we have repurchased over $64 million in face value of our debt since the beginning of June on average the repurchases were made at a 24% discount to par for a total cash outlay of just over 49 million, representing a yield to maturity of 13%.
Open market debt repurchases, which took place across all three tranches of our notes as well as our nearest dated maturity. Our 2026 term loan represent our priority to strengthen our balance sheet, while acting opportunistically when market conditions permit.
Turning to slide six as we stated in the past we are committed to our traditional local media business with the realization that the industry needs to transform in the coming years due to subscriber churn and regulatory constraints with that being said, we believe Sinclair as well as the broader industry has multiple growth drivers in the coming quarters.
First we expect to see record breaking political advertising revenue in 2024, we are seeing current political revenues trend above both 2021 and 2019 levels. So far this year and we expect the strong growth of issue oriented in political advertising and what appears to be several pillows.
Senate and house races in our footprint will accelerate this growth significantly as we get closer to next year's election.
Second our focus on high demand and differentiated local news and sports content as well as syndicated programming continues to drive strong and loyal viewership with 42% of your impressions across our station portfolio driven by non network content.
In addition, with nearly all of our big four traditional subscribers renew aimed by the end of next year. We continue to expect a three year positive low single digit CAGR of net retrans revenues through our negotiation cycle from 2022 through 2025, and while the regulatory environment is far from positive.
<unk> overall for broadcasters, particularly from a relative perspective to our big Tech and Big media competitors. We are cautiously optimistic regarding the long term changes for a couple of industry items.
Turning to slide seven.
All of these developments in addition to significant changes within the past several weeks in the pay TV distribution model. We believe could begin to launch what I liked referred to as the great re bundling.
We believe the recent charter Disney carriage agreement has the potential to materially strengthen the pay TV bundle in the future. While we don't know all the details regarding the new agreement. What we do know is it appears to significantly increase the consumer value proposition of pay TV relative to Ala Carte DTC offerings.
It will incorporate certain EC Disney DTC platforms, including Disney plus and ESPN plus into Charter's current pay TV packages. In addition, the agreement allows charter to drop some of Disney's lower rated undifferentiated cable channels from its vinyls we've.
We believe these developments reduce consumer reasons to leave traditional pay TV bundles and increased consumers overall value received which should leave lead to meaningful churn reduction of pay TV subscribers over time.
In addition, the pay TV bundle is crucially important to our television network partners as well.
Each network receives approximately $1 billion annually in reverse compensation from station groups as well as significant advertising and reach benefits the bottom line being that it is doubtful that networks are financially viable today without those revenue streams and other benefits and not only is the bundle important.
The networks, but it's also important to the various sports leagues that want to maximize both revenue and distribution of their content. The NFL is the most obvious example of this decision, making and they as a league has benefited tremendously from the nationwide distribution on over the air channels.
And all of these points up and it's our view that the relative value of the pay TV bundle as compared to Ala Carte DTC offerings remains strong and is in fact, improving as the environment continues to shift in favor of the pay TV bundle.
We look forward.
Two continuing having having discussions with our network and distribution partners as to how we can add content and other value to consumers to attract more subscribers back to the value of the bundle.
Now, let me turn it over to Rob to discuss our local media strategy.
Thanks, Chris turning to slide eight I wanted to touch on our strategic pillars of local media and the transformation that we are on our way to executing.
First is multi platform content.
We generate revenues, we need impressions and to increase impressions, we needed to be a multi platform media content provider the days of reaching eyeballs bleed through linear television transmission, Oregon, our stations have active presence on every platform.
Including linear and various social media applications due to station websites podcast everywhere, our viewers and listeners are in every platform that can carry our concert is where we need to be we are constantly working on maximizing impressions on that.
Best way to do that is to be on multiple platforms.
This leads to our second pillar community and interactive engagement, we not only capture impressions, but we monetize that we accomplish this by keeping our views on our platforms for longer periods of time through various methods of engagement.
We are developing opportunities for the view to further engage with us and for us to develop more unique viewers and consumers of our content as well as more revenue opportunities per user. These matters may include unique content, a game center or running various concepts just to name a few.
Which brings us to the third pillar marketing services, we continue to refine our services, including introducing a unified AD sales platform in recent months months, which ties together our AD proposal for linear digital as well as billing traffic with digital and order entry.
Systems, which provide massive efficiency improvements for our sales teams. It makes it digital multi platform sales dramatically easier to execute upon we're also using AI to increase ourselves prospecting and presentation velocities to drive our client sales growth leveraging the.
Allergy to build comprehensive profiles of prospects.
Constructing specific tailored communications the final pillar of our local media segment covers infrastructure and data distribution or our Nextgen broadcast cases.
Development of this data distribution as a service platform or Ddos is proceeding rapidly and we expect to launch our product before year end.
This platform is expected to allow us to centrally orchestrate our wireless data distribution capability.
More importantly, the scale of the business across the country and in conjunction with our technology partners around the World. This development of Nextgen is dependent upon the modernization of Sinclaire broadcast technology stack, which is now underway with our transition to the cloud.
In addition earlier this week, we launched the nest, our new free over the air National television network, which will develop home improvement true crime factual reality series and celebrity driven family shows the views the nest joins our lineup of national broadcast networks common charges.
DVD to the stack, which is our portfolio of linear networks, notably the stacks ratings were up 23% year over year during the quarter. In summary, these four strategic pillars of local media segment. In addition to expanding our programming content creation are the roadmap trends.
Forming local media into a growth engine once again in the coming years.
On slide nine pro forma core advertising, excluding political was up approximately 3% year over year during the third quarter. Our current outlook for the broader advertising environment is relatively stable of no national was slightly positive year over year in the quarter, which was welcome good news.
In terms of categories home related services continued to perform well up 18% year over year, while automotive remains strong up 7% home products were up 18% and legal continues to contribute to our growth. In addition, we are now beginning to lap the insurance Cabot.
Cory which reduced their budgets for the past year.
While it is still early in the quarter core advertising trends are currently pacing to a mid single digit growth rate over the year ago quarter similar to the third quarter trends.
On slide 10, I wanted to provide a quick update on political AD spending as we begin to look forward to 2024.
We booked $11 million in political advertising in the quarter above our 7% to $9 million guidance range and are guiding to $25 million to $30 million in the fourth quarter, which would imply a record for a non election year of $46 million to $51 million for the full year given these strong trends the political fundraising.
Outlook and the heavy spend forecasted to continue for issue based advertising, we see a record breaking election year coming up in 2024.
Turning to slide 11, we have signed two network affiliate agreements in recent months. This includes a multiyear deal with the CW network, which also expands our ability to negotiate our CW stations directly with.
Virtual Mvpds, we also entered into multi year network affiliation renewal for our CBS stations.
The company has also reached an agreement with Comcast to renew and extend its carriage agreements fall Sinclair television stations tennis channel Marquee Sports network and yes network.
With virtually all of our big four traditional subscribers up for renewals by the end of 2024, we remain confident in our guidance for our net retrans low single digit CAGR growth through a renegotiation cycle from 2022 through 2025.
Chris highlighted earlier, we continue to see positive industry trends regarding the long stability of net retransmission revenues now let me turn the call back over to Chris to provide an update on Nextgen broadcast plans as well as our venture segment.
Thanks, Rob on Slide 12, I wanted to provide a quick.
A couple of updates regarding Nexgen broadcast technology, which has now been deployed in half of our 86 markets covering 74% of our covered population in.
In addition nationwide coverage is now above 70% as the industry continues to improve next gen reach.
While our recent patent dispute has caused LG to suspend the inclusion of <unk> chips in its 2020 for our U S. TV lineup, Samsung and Sony continue to produce and sell HSE throughput already Tvs and the industry expects 10 million 300 are receivers to be available in the U S by year end.
We expect the patent verdict to have very little impact long term and is being appealed by LG and.
In addition, last week, we announced an agreement to expand development of and promote <unk> Nextgen services in South Korea with the Korea Radio promotion Association, we continue to play a leading role in accelerating the adoption of the Ddos business model and the continued transformation of local broadcast capabilities.
Only in the U S but globally.
As seen on slide 13, tennis channel recorded another strong quarter with $59 million in total revenue and $18 million and adjusted EBITDA, both well in excess of our quarterly guidance, our full year guidance for tennis channel is increasing as a result, we are now expecting full year revenues in the range of 226 to two.
<unk> hundred $27 million with full year adjusted EBITDA in the range of 61 to 62 nine.
Turning to tennis channel's operational highlights on slide 14, the average audience in the third quarter grew by 31% year over year, while social media impressions grew by 187% year over year.
The Tc plus streaming platform increased monthly subscribers by 11% year over year, while authenticating authenticated viewing for NV PD customers grew by 52%.
1.17 billion, which includes a cash position of $364 million.
And represents a sequential increase of $7 million on an apples to apples basis, excluding approximately $60 million a majority owned investment values from the fourth quarters.
Of note during the quarter the company had capital investments of approximately 5 million in minority investments and capital distributions of approximately $4 million, including exit payments.
As we have stated in the past our goal over time is to transition a significant amount of these minority investments into other majority investments that we expect to have longterm growth potential and consolidation opportunities as well as providing you all greater visibility into the performance of.
Venture assets.
We will continue to update our investors on a regular basis as we transform the investment portfolio.
Let me now turn the call over to Lucy to provide additional detail on our financial results in the quarter.
Thank you crash and good afternoon, everyone.
Beginning on slide 16 on a consolidated basis, we delivered media revenues during the third quarter did exceeded the high end of guidance as distribution in political advertising revenue with modestly higher than expectations and core advertising revenue met our internal forecast.
As compared to last year, which was a midterm election year consolidated media revenues decreased to $758 million during the quarter, primarily on the lower political revenues and to a lesser extent the impact of year over year subscriber churn.
On slide 17, consolidated adjusted EBITDA exceeded the high end of guidance for the quarter on the media of revenue Overachievement and a lower than expected expenses, driven by lower programming and production costs as well as lower sales digital and G&A cost as.
Compared to last year on a pro forma basis consolidated adjusted EBITDA in the corner decrease from the 2022 period with media revenues contributing primarily all of the decline as a result of the lower political revenues and an off cycle political year.
Slightly lower immediate expenses film payments and cooperative or had excluding one time cost partially offset the revenue decline.
Slide 18 shows are consolidated adjusted free cash flow results, which also exceeded the high end of our guidance for the quarter due to the favorable adjusted EBITDA results.
Just a free cash flow declined year over year on a pro forma basis due to the decline in the adjusted EBITDA as just discussed.
As well as higher interest expense and fewer cash distributions from our minority investment portfolio as last year, we exited several investments.
Flagged 19 walk through our balance sheet metrics with the next meaningful maturity almost three years away.
S T G. Sinclair television groups first lien net leverage was 4.3 times Boston Clara television groups total net leverage was 5.3 times at the end of the quarter on a trailing a quarter basis.
Insurance coverage was three three times as of September 30th.
Our consolidated cash position was 643 million at quarter end with 279 million of cash at S. B G and $364 million of cash at ventures.
Operator: Good day, everyone, and welcome to Sinclair's third quarter 2023 earnings conference call. At this time, all participants have been placed on a listen-only mode, and we will open the floor for your questions and comments after the presentation.
There were 63.4 million total shares outstanding at quarter end.
Christopher King: It is now my pleasure to turn the floor over to your host, Chris King, Vice President of Invest Relations.
Slide 20 introduces our fourth quarter guidance, which calls for total media revenues and the $812 million to $838 million range, we anticipate pro forma poor advertising revenues to be up mid single digits year over year, driven by strong digital advertising growth.
Operator: Serve the floor's yours. Thank you.
Christopher King: Good afternoon, everyone, and thank you for joining Sinclair's third quarter 2023 earnings conference call. Joining me on the call today are Chris Ripley, our President and Chief Executive Officer, Lucy Rutishauser, our Executive Vice President and Chief Financial Officer, and Rob Weisbord, our Chief Operating Officer, and President of Local Media. Before we begin, I want to remind everyone that slides and supplemental information for today's earnings call are available on our website, sbgi.net, on the Investor Information page, and on the earnings webcast page.
While distribution revenue is expected to be up slightly your every year at the mid point of guidance.
We expect adjusted EBITDA to be in the range of 176 to 196 million down from the pro forma $311 million of adjusted EBITDA in the year ago period, due largely to the lower political advertising revenue in an off cycle election year higher production.
Christopher King: Certain matters discussed on this call may include forward-looking statements regarding, among other things, future operating results. Such statements are subject to a number of risks and uncertainties. Actual results in the future could differ from those described in the forward-looking statements as a result 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.
<unk> cost in network programming fees and investments in technology infrastructure in various growth initiatives we.
We anticipate adjusted free cash flow of $77 million to $99 million in the quarter.
Turning disliked 21, incorporating our fourth quarter guidance for the full year. We expect total company consolidated revenues of 3.129 billion to 3.154 billion needy expenses for the year are expected to be favorable to our prior year.
Christopher King: The company uses its website as a key source of company information, which can be accessed at www.sbgi.net. In accordance with regulation FD, this call is being made available to the public. A webcast replay will be available on our website, who will remain available until our next quarterly earnings release.
<unk> guidance due primarily to the fate for Opel expense performance in the third quarter or.
Christopher King: Included on the call will be a discussion of non-GAP financial measures, specifically adjusted EBITDA, adjusted free cash flow, and leverage. The company considers the adjusted EBITDA to be an indicator of the company's operating performance and the ability to service its debt. The company also believes that the adjusted EBITDA is frequently used by industry analysts, investors, and lenders as a measure of valuation and ability to service debt. The company also discloses a segment adjusted EBITDA as an indicator of the operating performance of its segments in accordance with ASC 280 segment reporting.
Full year guidance also reflects approximately 60 million and technology infrastructure and growth initiatives spending down from our prior 65 million dollar forecast.
Adjusted EBITDA is estimated at between 545 and $564 million and they just free cash flow between 220 in 242 million where $3.64 per share at the mid point of guidance and with that I'd like to turn it the call back over to press for some clothes.
Christopher King: The company considers adjusted free cash flow to be an indicator of the company's operating performance. The company also believes the free cash flow is a commonly used measure for companies in the local media industry. In addition, this measure is frequently used by industry analysts, investors, and lenders as a measure of valuation for local media companies. These measures are not formulated in accordance with GAP, are not meant to replace GAP measurements, and may differ from other companies' uses or formulations. The company does not provide reconciliation on a forward-looking basis. Further discussions and reconciliation of the company's non-GAP financial measures to comparable GAP financial measures can be found on our website, www.spgi.net.
And comments.
Thank you Lucy.
Turning to our key takeaways on slide 22, Sinclair delivered strong third quarter results as we met or exceeded our guidance expectations in the third quarter. In addition, our commitment to reducing debt has been on full display as we have repurchased more than 64 million at face value of that in an average 24 person.
Cent discount to par through open market repurchases since the beginning of June.
And while we continue to deal with increased linear subscribe return levels Sinclair as well positioned for the near and long term as we are focused on transitioning sorry, transforming the broadcast industry through our for strategic pillars.
Christopher King: Any discussion to pro-former numbers as compared to 2022 will exclude diamond, which was deconsolidated March 1, 2022, and any business sold since the beginning of 2022. For actual results, including the periods that diamond was consolidated, please refer to this afternoon's earnings release.
In addition, the much watch charter does need to carry a dispute was resolved in a manner that we believe highlights the importance and relative value of the pay T V bundle, which is a significant positive for the industry as we anticipate improved a long-term friends for linear subscribed return as a result.
Christopher King: In addition, due to the pending diamond litigation, we are unable to comment on any specifics regarding the legal issues surrounding diamond's bankruptcy, or any potential financial impact that may or may not occur as a result of those matters. Other than to say that Sinclair firmly believes it has meritorious defenses to the allegations in the diamond lawsuit, and we plan to vigorously defend again.
Advertising trends remain solid with record political revenues during the third quarter for a nonpolitical year, we expect record political revenues and both the fourth quarter and in 2024, which will drive strong adjusted EBITDA in free cash flow growth for us in 2024 and.
In the meantime, core advertising trends continue to improve as we saw significant year over year growth from several categories during the quarter.
Christopher Ripley: Let me now turn the call over to Chris Ripley. Good afternoon, and thank you for joining us. I'll start on slide 4 by introducing an overview of our third quarter financial results. As you can see, Sinclair delivered strong third quarter results that met or exceeded our guidance expectations across the board on both advertising and distribution revenues, as well as media expenses in both our local media and tennis channel segments. As a result, we exceeded the midpoint of our adjusted EBITDA guidance for the quarter by 40%.
We are also looking ahead to significant retransmission agreements that are coming up for renewal over the next 12 months.
In the meantime, we continue to see increased demand, both domestically and internationally for a tennis channel related assets and programming.
Sinclair as well positioned for the future and we remain excited about the opportunities that lie ahead of us.
Lucy Rob and I will now open the call to questions. Thank you for joining us today.
Christopher Ripley: And we also exceeded adjusted free cashflow guidance. Turning to slide 5, we have repurchased over 64 million in face value of our debt since the beginning of June. On average, the repurchases were made at a 24% discount to par for a total cash outlay of just over 49 million, representing a yield to maturity of 13%. These open market debt repurchases, which took place across all three tranches of our notes, as well as our nearest stated maturity, our 2026 term loan, represent our priority to strengthen our balance while acting opportunistically when market conditions permit.
Certainly everyone. At this time, we will be conducting a question and answer session. If you have any questions or comments. Please press star one on your phone at this time.
We do ask the well posing your question. Please pick up your handset if you're listening on speakerphone to provide optimum sound quality.
Once again, if you have any questions or comments. Please press star one on your phone.
Your first question is coming from Dan Chronos from the benchmark company. Your line is life.
Thanks, Good afternoon, nice quarter, guys Uhm, maybe <unk>.
There's a lotta unpack here, but on the distribution your commentary around charter Disney just you know.
Christopher Ripley: Turning to slide 6, as we stated in the past, we are committed to our traditional local media business with the realization that the industry needs to transform in the coming years due to subscriber turn and regulatory constraints. With that being said, we believe Sinclair, as well as the broader industry, has multiple growth drivers in the coming quarters. First, we expect to see record-breaking political advertising revenue in 2024. We are seeing current political revenues trend above both 2021 and 2019 levels so far this year.
It seems like rates been pretty strong from what we see them in your results kind of.
Also appear to start reflecting that I guess, you know the flipside of your commentary or or the other aspect of your commentary is the reduction of carriage of some of the low value cable now it's more dollars accruing to broadcast and I'm. Just curious as you have these conversations on the <unk> side, you know how much your <unk>.
Christopher Ripley: And we expect the strong growth of issue-oriented political advertising and what appears to be several close Senate and House races in our footprint will accelerate this growth significantly as we get closer to next year's election. Second, our focus on high demand and differentiated local news and sports content, as well as syndicated programming, continues to drive strong and loyal viewership, with 43% of your impressions across our station portfolio driven by non-network content.
Christopher Ripley: In addition, for nearly all of our big four traditional subscribers renewing by the end of next year, we continue to expect a three-year positive, low single-digit-cager of net-retrans revenues through our negotiation cycle from 2022 through 2025.
Factoring that in to your neck guide or on the right side of how much you think you can kind of continue to pick up here.
Well, it's it's it's a great observation you know I think there's there's a few key takeaways from.
The the charter Disney deal and one of which is that premium content got paid and and non premium content like the dozen or so you know channels that Disney and it's getting dropped from charter you know, we're don't get a does not get paid and.
And so we think that's significant our programming is pound for pound. The most premium programming available to pay T. V distributor. So so we definitely see that being a a validation of our pricing power.
And and everything we've seen so far from recent negotiations.
Christopher Ripley: And while the regulatory environment is far from positive, overall for broadcasters, particularly from a relative perspective to our big tech and big media competitors, we are cautiously optimistic regarding long-term changes for a couple of industry items. Turning to slide seven, all of these developments, in addition to significant changes within the past several weeks in the PayTV distribution model, we believe could begin to launch what I like referred to as the Great Rebundling.
You know I have had it reinforces that that fact.
And I think the other thing that I would point out about the Disney charter.
Arrangement that I think is just a really solid plus is the inclusion of these ala carte DDC offerings like Disney plus and E. S. P N plus into the charter space packages is is a real significant value proposition for the consumer.
Christopher Ripley: We believe the recent Charter Dizzy Carrier Agreement has the potential to materially strengthen the PayTV bundle in the future. While we don't know all the details regarding the new agreement, what we do know is it appears to significantly increase the consumer value proposition of PayTV relative to Alachart Dizzy Office. Farings. It will incorporate certain DC, Disney, D to C platforms, including Disney Plus, and ESPN Plus, into Charter's current ATV packages. In addition, the agreement allows Charter to drop some of Disney's low rated, undifferentiated cable channels from its bundles.
And and we think it to the extent that spreads to other distributors and other media companies, we view that as a real positive and it'll give the relative value proposition for the consumer of leading to essentially you know the main alternative to leaving right now is to cobble together. These.
<unk> D to see offerings, and and and by the way those go up in price you know month by month day by day and they get ads you know added and they you know they crack down on password. So the relative cost of Ala Carte DDC is is skyrocketing up and the relative value of pay T V is actually.
Christopher Ripley: We believe these developments to reduce consumer reasons to lead traditional pay TV bundles and increase consumers overall value received, which should lead to meaningful turn reduction of pay TV subscribers over time. In addition, the pay TV bundle is crucially important to our television network partners as well. Each network receives approximately 1 billion annually in reverse competition from station groups, as well as significant advertising and reach benefits. The bottom line being that it is doubtful that networks are financially viable today without those revenue streams and other benefits, and not only is the bundle important to the networks, but it is also important to the various sports leagues that want to maximize both revenue and distribution of their content.
Increasing because more and more it's getting added to the offering and so we think that's a very positive.
Trend that wasn't the case, a few years ago, but we're seeing you know over the last couple of years, we're seeing Ah Ah Ah Ah right sizing of the of the of the the two base alternatives that people choose for their video entertainment.
That's super helpful and just just housekeeping after the deals renewal do announced in the released today what would you have left over the next 12 months.
We still have the the vast benadryl almost all of our traditional pay T subscribers coming up in the neck and up between now and then it's Wednesday for it.
Christopher Ripley: The NFL is the most obvious example of this decision making, and they, as a league, have benefited tremendously from the nationwide distribution on over-the-air channels. Add all these points up, and it is our view that the relative value of the pay TV bundle, as compared to Alachart DC offerings, remains strong and is, in fact, improving as the environment continues to shift in favor of the pay TV bundle.
So we feel really good about.
That dynamic heading into you know what should be significant step ups.
And then just on the political front, obviously, there's been a lot of talk about you know fund raising and then you know obviously the whole the whole kingscott stuff and I know people have been afraid to sort of go out there and talk about record for next year, given the uncertainties on the presidential side, but and or maybe the.
Christopher Ripley: We look forward to continuing having discussions with our network and distribution partners as to how we can add content and other value to consumers to attract more subscribers back to the value of the bundle.
Guarantee that would come on the presidential side, So just any incremental color on sort of your confidence in calling for record 24 with that backdrop.
Robert Weisbord: Now, let me turn over to Rob to discuss our local media strategy. Thanks, Chris.
Robert Weisbord: Turning the slide A, I wanted to talk to our board search strategic pillars of local media and the transformation that we are on our way to execute it. First is multi-platform content. To generate revenues, we need impressions. And to increase impressions, we need to be a multi-platform media content provider. The days of reaching eyeballs only through linear TV transmission are gone. Our stations have active presence on every platform, including linear and various social media applications, YouTube, station websites, podcasts, everywhere our viewers and listeners are, and every platform that can carry our content is where we need to be.
Yeah, I'll answer that what's wrong, we have significant Senate house races, and seeing a lot of money spent on issues based advertising. So we're still bullish on calling it for a record year for us.
The presidential election, we're seen spending in Iowa, some money and just came down a couple of hours ago. So the money will be spent whether it's appropriate for the election.
Or the local races, and the issues that are out there that are significant.
And any any external research on the topic is still pointing towards record fundraising.
And that that's really the key money races money spent.
Robert Weisbord: We are constantly working on maximizing impressions, and the best way to do that is to be on multiple platforms. This leads to our second pillar, community and interactive engagement. We not only capture impressions, but we monitor that. We accomplish this by keeping our viewers on our platforms for longer periods of time through various methods of engagement. We are developing opportunities for the viewer to further engage with us and for us to develop more unique viewers and consumers of our content as well as more revenue opportunities per user.
That has been historically true just like Chris if I could just ask one last one just on an allocation of capital allocation you guys. Obviously deserve credit for buying you know back your debt in the open market at a discount since it a cruise the equity I think that's been smart.
We're at the point here given that everyone thinks the sky's falling where and I know you guys care about the value of your equity. So you know you you had a big buyback at these levels I just don't know how you think about balancing the two and knowing that most of the free cash is gonna come in next year, but just kind of your thoughts on balancing the two from this point.
Robert Weisbord: These methods may include unique content, a game center, or running various content, just a name or view, which brings us to the third pillar of marketing services. We continue to refine our services, including introducing a unified ad sales platform in recent months, months, which tries together our ad proposals for linear, digital, as well as billing, traffic for digital and order entry systems, which provide massive efficiency improvements for our sales teams. It makes me digital, multi-platform sales dramatically easier to execute upon. We are also using AI to increase our sales process and presentation velocity to drive our client sales growth, leveraging the technology to build comprehensive profiles of prospects and constructing specific tailored communications.
Sure and and you know, we we we never like to be to.
Two forward looking when it comes to these these types of things, but we as you noted we.
We did buy back a significant amount of stock. This year, we have been very active on the death side, we've heard from investors that.
The equity would benefit from lower amounts of <unk> and so we have shifted our focus and that is our current focus today, but you are right in pointing out that the equity is.
Really really low from a fundamental perspective, and it's hard to ignore that.
Robert Weisbord: To find a pillar for our local media segment covers infrastructure and data distribution, or our next gen broadcast cases. Development of this data distribution has a service platform where DDAS is proceeding rapidly and we expect to launch our product before a year end. This platform is expected to allow us to centrally orchestrate our wireless data distribution capability and, more importantly, to scale the business across the country and in conjunction with our technology partners around the world. This development of next gen is dependent upon the modernization of Sinclair's broadcast technology stack, which is now underway with our transition to the cloud.
Okay. Thanks for bearing with me appreciate it thanks.
Thank you. Your next question is coming from Stephen Cahill from Wells Fargo, you're lying is live.
Thanks, So Chris there's just so much noise in Retrans. These days between sub declines in pricing and Virtuals and you know you all have as you said virtually every sub renewing I think between now and in the middle of next year. So if we just step back from it all.
<unk> I think you're Retrans revenue was down around 4%. This quarter. It's clearly gonna start accelerating here very very soon can you help us with where you think it might get to win that revenue peaks. After after all these renewals cause I think that's really hard thing kind of understanding the expectation for <unk>.
Robert Weisbord: In addition, earlier this week, we launched the Nest, our new free over-the-air national PV network, which will develop home improvement, true-prime, factual reality series, and celebrity-driven family shows the views. The Nest joins our lineup of national broadcast networks, Comment, Charge, and PBD, to the stack, which is our portfolio of linear networks, notably the stacks ratings were up 23% year over year during the quarter.
For Retrans in net Retrans related to to your guidance and then Lucy. So you know you outperformed a lot on EBITDA in Q3 versus the guidance slide for is really helpful to see where that came from some good revenue performance and there are a lot of it is on the cost side as well can you just help us unpack what.
And cost came out significantly better than what you would expect it are you seeing lower programming expenses is this you know cost cutting that you've been doing it. It doesn't look like it's timing, but I just wanted to just just based on the queue for guide, but I wanted to make sure that I understand that thank you.
Robert Weisbord: In summary, these four strategic pillars of local media segment, in addition to expanding our programming content creation, are the roadmap to transforming local media into a growth engine once again in the coming years.
Alright so.
Robert Weisbord: On slide 9, Proformer core advertising, including political, is up approximately 3% year over year during the third quarter. Our current outlook for the broader advertising environment is relatively stable. Of note, the arsenal was slightly positive year over year in the quarter, which was welcome, good news. In terms of categories, home related services continue to perform well, up 18% year over year, while automotive remains strong, up 7%, home products were up 18%, and legal continues to contribute to our growth.
As it relates to.
<unk>.
I would point you back to the guidance, we gave over a year ago on our 2022 to 2020 fours or a three year <unk>, which were over a year into now.
And we are standing by that guidance of low single digits growth.
And so if you want to see.
Not necessarily where it peaks, but you know where it's headed to you know in 2025.
From here you know just do the math based on where we were in 2022 so.
Robert Weisbord: In addition, we are now beginning to lock the insurance category, which reduced their budgets for the past year. And while it is still early in the quarter, core advertising trends are currently pacing to a mid-signal digit growth rate over the year ago quarter, similar to the third quarter trends.
That you know you're right you know it basically you should see a meaningful acceleration.
Starting in the fourth quarter, and and then making it's way up to a much higher number from where it is run rating today to that gross number in 2025.
Robert Weisbord: On slide 10, I wanted to provide a quick update on political ad spending as we begin to look forward to 2022. We booked 11 million in political advertising in the quarter, above our 7 to 9 million guidance range, and our guiding to 25 to 30 million in the fourth quarter, which would imply a record for a non-election year of 46 to 51 million for the full year.
Yeah.
Steven on the the expense question. So yeah. This is something we have been as a company guest on all year is and it's a company wide focused to look at really questioning some of our expenses and so where you're seeing it is really.
Coming across you know all of our large spending categories and and department. So you can't really point to just one area again. This has been a company wide focus and and and and not just your third quarter, but for the for the full year and you know and as you get it.
Robert Weisbord: We have signed two network affiliate agreements in recent months. This includes a multi-year deal with the CW network, which also expands our abilities and negotiate our CW stations directly with virtual MVPDs. We also intend a multi-year network affiliation renewal for our CVS stations. The company has also reached an agreement with Comcast, a renewed and extended carriage agreements, false and clear television stations, tennis channel, marquee sports network, and yes, network. With virtually all of our big four traditional subscribers up for renewals by the end of 2024, we remain confident in our guidance for a net retrans low single digit catered growth through our renegotiations cycle from 2022 through 2025. Chris highlighted earlier we continue to see positive industry trends regarding the long stability of net retransmission revenues.
<unk> from 234 word Friday to queue for you know there will be some seasonality. They will just be from quarter to quarter. Just you know Q4 is usually a paper quarter for us and sales expense commissions will be up on the higher revenue, but you know we we are really focused on this in and taken a.
Lot of cost out of the business. This year I think I think what I would add to that is that we expect that these changes will be.
Or a permanent right. These are not just one time costs saves this is us getting more efficient us getting rid of things that we didn't need.
Things of that nature. So it will continue in fact, I think we will continue to improve all the investments that we're making this here, which is quite significant around transformation b a cloud b at the unified AD platform via D Dash.
Christopher Ripley: Now let me turn the call back over to Chris to provide an update on next gen broadcast plans, as well as our venture segment. Thanks Rob. On slide 12, I wanted to provide a quick couple of updates regarding next gen broadcast technology, which has now been deployed in half of our 86 markets covering 74% of our covered population. In addition, nationwide coverage is now above 70% as the industry continues to improve next gen reach.
You know it and it has a number of other smaller initiatives there, they're all geared around being more efficient with what we have selling more with what we have so either making more revenue or or running the business unless expense and and so that tries to greater efficiency will continue.
We want to stop after this year.
Thank you.
Thank you once again ever Wonder if you have any questions or comments. Please press Star then one on your phone. Your next question is coming from Aaron Watch from Deutsche Bank. Your line is live.
Christopher Ripley: While a recent patent dispute has caused LG to suspend the inclusion of 3.0 chips in its 2024 US television lineup, Samsung and Sony continued to produce and sell ATSC 3.0 ready TVs and the industry expects 10 million 3.0 receivers to be available in the US by year end. We expect the patent verdict to have very little impact long term and is being appealed by LG.
Everyone. Thanks for having me I'm just.
A few questions for me I guess, Chris <unk>, one more follow up on the distribution side, you've highlighted that you have a majority of your sub base up for renewal over the next 12 months, we've seen a couple of notable black.
Blackouts between station owners and distributors in a couple of elongated ones, even with the NFL I'm going.
Christopher Ripley: In addition, last week we announced an agreement to expand development of and promote ATSC 3.0 next gen services in South Korea with the Korea Radio Promotion Association. Our full year guidance for Tennis Channel is increasing as a result. We are now expecting full year revenues in the range of 226 to 227 million with full year adjusted EBITDA and the range of 61 to 62 million. Turning to Tenish-Hall's operational highlights on slide 14, the average audience in the third quarter grew by 31% year-of-year while social media impressions grew by 187% year-of-year.
With that backdrop impulse charter Disney R U bracing for more abrasive negotiations as you go into these discussions.
At least compared to the past are you are you approaching them any differently.
And given that we are on the outside looking in is the base case that we should work with is that these negotiations can get done without any prolonged blackouts.
So I would actually Aaron challenge the notion that that blackouts have increased.
You know I, just think people are paying more attention to them periodic blackouts have been a common occurrence for years.
And I can remember plenty of times, where we had much longer blackouts in the industry, but I'll tell you from a Sinclair perspective, we haven't had a single blackout on the on the broadcast side or multiple years and and so you know <unk> <unk>.
Christopher Ripley: The TC Plus streaming platform increased monthly subscribers by 11% year-of-year while authenticating, authenticated viewing for NBPD customers grew by 52%. The T2 Fast Channel grew by 27% year-of-year as the exclusive tennis content continues to drive strong growth across multiple delivery channels.
I don't think it would be accurate, though I haven't actually looked at the numbers myself to say that blackouts have increased.
It's all from the very start of Retrans you know, it's it's always been a battle and it continues to be one you know one that's that's spot in a friendly fashion and you know with because we both need each other and so I expect that to continue I don't.
Christopher Ripley: In addition, Tenish-Hall announced a joint venture with the Carvana Professional Pickleball Association during the quarter, which launched a new 24-hour Pickleball-dedicated Fast Channel October. Tenish-Hall will also now produce all events for the PPA tour. We believe Pickleball will drive even stronger growth metrics for Tenish-Hall in the upcoming quarters, and we could not be more excited about the opportunities that lie ahead.
C a meaningful change and how we interact with the N. A P. DS for all the reasons I cited when I talked about the Disney charter.
Deal with it.
In terms of what's available for distributors to secure and and Potett ours is the most desirable full-stop.
Christopher Ripley: Before I turn the call over to Lucy to discuss the financial results of the quarter, I wanted to provide a brief update on our venture's investment portfolio on slide 15. Which we note excludes Tenish-Hall and Compulse.
So if there if they want to be in the video business, which they all still want to be in the video business.
I assure you that you know they need our content and and so I don't think the marketplace has really changed that much.
Christopher Ripley: In addition, several smaller consolidated investments that were included in the investment portfolio last quarter will remove from our calculation this quarter. As of September 30, the minority investment portfolio's market value was 1.17 billion, which includes a cash position of 364 million, and represents a sequential increase of 7 million on an apples-to-apples basis, excluding approximately 60 million of majority owned investment values from these four quarters. Of note, during the quarter, the company had capital investments of approximately 5 million in minority investments and capital distributions of approximately 4 million, including exit payments.
Okay. That's helpful context, and then secondly around the core advertising picture based on your third quarter results in Fork you Guide.
It seems like heading in the right direction is it too early to say you may be turning a corner towards more sustainable positive AD trends going forward and rolling into 2024 or is it.
Is it a little too early to make that call and I I guess can be early positive signs like national moving towards positive traction.
Can they be sustainable.
Yeah, It's Ralph I would say that we're cautiously optimistic auto has returned services is.
Christopher Ripley: As we have stated in the past, our goal over time is to transition a significant amount of these minority investments into other majority investments that we expect to have long-term growth potential and consolidation opportunities, as well as providing you all greater visibility into the performance of venture assets. We will continue to update our investors on a regular basis as we transform the investment portfolio.
Getting stronger blue care of categories a strong.
Retail and travelers strong so you know.
I wish I had a crystal ball, but we are optimistic that we have seen this turned around with gone through the <unk> <unk>.
Recession thought process and now we've come full turn into the the watching your makes it robust and <unk>.
Lucy Rutishauser: Let me now turn the call over to Lucy to provide additional detail on our financial results in the quarter.
Lucy Rutishauser: Thank you, Chris, and good afternoon, everyone. Beginning on slide 16, on a consolidated basis, we delivered media revenues during the third quarter that exceeded the high end of guidance as distribution and political advertising revenue was modestly higher than expectations, and core advertising revenue met our internal forecast. As compared the last year, which was a mid-term election year, consolidated media revenues decreased to 758 million during the quarter, primarily on the lower political revenues, and to a lesser extent the impact of your over-year subscriber turn.
<unk>, we're excited because everything we've been building for the last few years, including R. A.
Lucy Rutishauser: On slide 17, consolidated adjusted EBITDA exceeded the high end of guidance for the quarter on the media revenue over achievement, and on lower than expected expenses driven by lower programming and production costs, as well as lower sales, digital, and GNA costs.
A I M L pricing dynamic pricing system full kicking to allow us to maximize our value of our assets.
I also think it's a reflection of of of of continued shift.
Multiplatform strategy in digital becoming a bigger and bigger portion of our total advertising pie.
Are we really haven't put a lot of work and Rob's team has been a lot of work and it and it ended up transforming our sellers into.
You know marketing consultants as opposed to sellers, that's starting to pay dividends.
We live in a cross platform solution World and we stayed at earlier that building our assets on every single platform and Remonetize every single platform. So go to the 24th.
Are really happy to be expanded upon our podcast the network as well as our presence on the various social media networks with the hiring.
Lucy Rutishauser: Ross. As compared the last year on a pro-forma basis, consolidated adjusted EBITDA on the quarter decreased from the 2022 period with media revenues contributing primarily all of the decline as a result of the lower political revenues in an off-cycle political year. Slightly lower media expenses, film payments and corporate overhead, excluding one time cost, partially offset the revenue decline. Slightly teen shows are consolidated adjusted free cash flow results, which also exceeded the high end of our guidance for the quarter due to the favorable adjusted EBITDA results.
A gentleman that came from comedy NASS N H B O Max to give a little bit different walk through how intact, the social media space. So.
As we do the content. We also have a mom and decision plans to go along with it.
I appreciate the thoughts guys. Thank you.
Right.
<unk>.
Lucy Rutishauser: Adjusted free cash flow declined year-over-year on a pro-forma basis due to the decline in the adjusted EBITDA as just discussed, as well as higher interest expense and fewer cash distributions from our minority investment portfolio, as last year we exited several investments.
Thank you that concludes our Q&A session I'll know hand, the conference back to Chris Ripley, President and CEO for closing remarks. Please go ahead.
Thank you all for joining us today and to the extent you have any questions or comments feel free to reach out.
Thank you everyone. This concludes today's event you may disconnect at this time and have a wonderful day. Thank you for your participation.
These nonrecurring.
Lucy Rutishauser: So like 19 walks through our balance sheet metrics with the next meaningful maturity almost three years away. STG, Sinclair Television Group's first lean net leverage was 4.3 times at the end of the quarter on a trailing 8 quarter basis. Interest coverage was 3.3 times as of September 30. Our consolidated cash position was 643 million at quarter end with 279 million of cash at SBG and 364 million of cash at ventures. There were 63.4 million total shares outstanding at quarter end.
Lucy Rutishauser: Slide 20 introduces our fourth quarter guidance, which calls for total media revenues in the 812 to 838 million range. We anticipate pro-forma core advertising revenues to be up mid-single digits year-over-year driven by strong digital advertising growth. Our distribution revenue was expected to be up slightly year-over-year at the midpoint of guidance. We expected adjusted EBITDA to be in the range of 176 to 196 million, down from the pro-forma 311 million of adjusted EBITDA in the year-ago period, due largely to the lower political advertising revenue in an off-cycle election year, higher production cost and network programming fees and investments in technology infrastructure and various growth initiatives.
Lucy Rutishauser: We anticipated just a free cash flow of 77 to 99 million in the quarter. Turning to slide 21, incorporating our fourth quarter guidance, for the full year we expect total company consolidated revenues of 3,129 million to 3,154 million. Media expenses for the year are expected to be favorable to our prior year full guidance, due primarily to the favorable expense performance in the third quarter. Our full year guidance also reflects approximately 60 million in technology infrastructure and growth initiatives spending down from our prior 65 million to our fourth quarter.
Lucy Rutishauser: OST. Adjusted EBITDA's estimated at between 545 and 564 million, and adjusted free cash flow between 220 and 242 million, were $3.64 per share at the midpoint of guidance.
Christopher Ripley: With that, I'd like to turn it be called back over to Chris for some closing comments. Thank you, Lucy. Turning to our key takeaways on slide 22, Sinclair delivered strong third quarter results as we met or exceeded our guidance expectations in the third quarter. In addition, our commitment to reducing debt has been on full display as we have repurchased more than 64 million in face value of debt and an average 24% discount to par through open market.
Christopher Ripley: We've purchased this since the beginning of June. And while we continue to deal with increased linear subscriber turn levels, Sinclair is well positioned for the near and long term as we have focused on transitioning, sorry, transforming the broadcast industry through our four strategic pillars. In addition, the much-watched Charter Disney debt carried dispute was resolved in a manner that we believe highlights the importance and relative value of the pay TV bundle, which is a significant positive for the industry as we anticipate improved long term trends for linear subscriber turn as a result.
Christopher Ripley: Advertising trends remain solid with record political revenues during the third quarter for a non-flipply year. We expect record political revenues in both the fourth quarter and in 2024, which will drive strong adjusted EBITDA and free cash flow growth for us in 2024. In the meantime, core advertising trends continue to improve as we saw significant year-of-year growth from several categories during the quarter.
Christopher Ripley: We are also looking ahead to significant retransmission agreements that are coming up for renewal over the next 12 months. In the meantime, we continue to see increased demand both domestically and internationally for a tennis channel related assets and programming. Sinclair is well positioned for the future, and we remain excited about the opportunities that lie ahead of us.
Operator: Lucy Rob and I will now open the call to questions. Thank you for joining us today. Certainly everyone at this time will be conducting a question-and-answer session. If you have any questions or comments, please press star one on your phone at this time. We do ask about posing your question. Please pick up your handset if you're listening on speaker phone to provide optimum sound quality. Once again, if you have any questions or comments, please press star one on your phone.
Daniel Kurnos: Your first question is coming from Dan Kernos from the benchmark company. Your line is live. Great. Thanks. Good afternoon. This is a nice quarter, guys. Maybe Chris, there's a lot to unpack here, but on the distribution, your commentary around chartered Disney. It seems like rates have been pretty strong from what we've seen and your results appear to start reflecting that. I guess the flip side of your commentary or the other aspect of your commentary is the reduction of carriage of some of these low-value cable nets and more dollars accruing to broadcasts.
Daniel Kurnos: I'm just curious as you have these conversations on the retran side, how much you're factoring that into your net guide or on the right side is how much you think you can kind of continue to pick up here. Well, it's a great observation. You know, I think there's a few key takeaways from the charter Disney deal, and one of which is that premium content got paid, and non-premium content like the dozen or so, you know, channels that Disney, and it's getting dropped from charter, you know, where don't get it does not get paid, and so we think that's significant. Our programming is pound per pound, the most premium programming available to a pay TV distributor.
Christopher Ripley: So we definitely see that being a validation of our pricing power, and everything we've seen so far from recent negotiations, you know, have had reinforces that fact, and I think the other thing that I would point out about the Disney charter arrangement that I think is just a really solid plus, it's the inclusion of these allocart E to C offerings like Disney plus, and ESC and plus into the charter space packages, is a real significant value proposition for the consumer, and we think if you sent that spreads to other distributors and other media companies, we do that as a real positive, and it'll give the relative value proposition for the consumer of leaving, to essentially, you know, the main alternative to leaving right now is to cobble together these allocart E to C offerings, and by the way, those go up in price, you know, month by, month day by day, and they get ads, you know, added, and they, you know, they cracked on on passwords, so the relative cost of allocart E to C is skyrocketing up, and the relative value of pay TV is actually increasing because more and more is getting added to the offering, and so we think that's a very positive trend that wasn't the case a few years ago, but we're seeing, you know, over the last couple of years, we're seeing a right sizing of the two, you know, base alternatives that people choose for their video entertainment.
Daniel Kurnos: That's super helpful, and just housekeeping after the deals or renewals you announced in the release today, what do you have left over the next 12 months? We still have the vast majority of almost all of our traditional pay TV subscribers coming up, in the neck and up between now and the end of 24, so we feel really good about that dynamic heading into, you know, what should be significant step-ups.
Robert Weisbord: And then just on the political front, obviously, there's been a lot of talk about, you know, fundraising, and then, you know, obviously the whole team has got stuff, and I know people have been afraid to sort of go out there and talk about record for next year, given the uncertainties on the presidential side, but, or maybe the guaranteed outcome on the presidential side, so just any incremental color on sort of your confidence in calling for record 24 with that back. Yeah, I'll answer that.
Robert Weisbord: It's Rob. We have significant Senate house races and seeing a lot of money spent on issue based advertising. So we're still bullish from calling it for a record year for us. The presidential election we're seeing spend the in Iowa. Some money just came down a couple hours ago. So the money will be spent whether it's a presidential election for the local races and the issues that are out there that are significant. And the external research on the topic is still pointing towards record fundraising. And that's really the key money raises money spent. That has been historically true.
Daniel Kurnos: Chris, if I can just ask one last one just on allocation or type of allocation, you guys obviously deserve credit for buying back your debt in the open market. It does count since it accrues to the equity. I think that's been smart. We're at the point here given that everyone thinks this guy is falling where, and I know you guys care about the value of your equity. So, you know, you had a big buyback at these levels.
Daniel Kurnos: I just don't know how you think about balancing the two and knowing that most of the free cash is going to come in next year but just kind of your thoughts on balancing the two from this point on. Sure. And, you know, we never like to be too forward looking when it comes to these types of things. But as you noted, we did buyback a significant amount of stock this year. We have been very active on the debt side.
Daniel Kurnos: We've heard from investors that the equity would benefit from lower amounts of debt. And so, we have shifted our focus and that is our current focus today. But you are right in pointing out that the equity is really, really low from a fundamentals perspective and it's hard to ignore that.
Operator: Okay. Thanks for bearing with me. Appreciate it. Thanks. Thank you.
Stephen Cahill: Your next question is coming from Stephen Cahill from Wells Fargo. Your line is live. Thanks. So, Chris, there's just so much noise in retrans these days between sub declines and pricing and virtuals. And, you know, you all have, as you said, virtually every sub renewing I think between now and the middle of next year. So, if we just step back from it all, I think your retrans revenue was down around 4% this quarter. It's clearly going to start accelerating here very, very soon.
Stephen Cahill: Can you help us with where you think it might get to when that revenue peaks after after all these renewals? Because I think that's the really hard thing and kind of understanding the the expectation for for retrans and net retrans related to your guidance.
Lucy Rutishauser: And then Lucy, so, you know, you outperformed a lot on Epidon Q3 versus the guidance slide 4 is helpful to see where that came from. Some good revenue performance in there. A lot of it is on the cost side as well. Can you just help us unpack what in cost came out significantly better than what you'd expected? Are you seeing lower programming expenses? Is this, you know, cost cutting that you've been doing? It doesn't look like it's timing, but I just want to just just based on the Q4 guide, but I want to make sure that I understand that.
Lucy Rutishauser: Thank you. All right, so as it relates to net retrans, I would point you back to the guidance we gave over a year ago on our 2022 to 2024, so our three-year keg, which we're over a year into now, and we are standing by that guidance of low single digits growth, and so if you want to see not necessarily where it peaks, but where it's headed to in 2025, from here, just do the math based on where we were in 2022, so that, you know, you're right, you know, it basically, you should see a meaningful acceleration starting in the fourth quarter, and then making its way up to a much higher number from where it is run rating today to that growth number in 2025.
Lucy Rutishauser: Yeah, and so, Steven, on the expense question, so, you know, this is something we have been as a company, Gaston, all year, is, and it's a company-wide focus to look at really questioning some of our expenses, and so where you're seeing it is really coming across, you know, all of our large spending categories and departments, so you can't really point to just one area. Again, this has been a company-wide focus, and not just your third quarter, but for the four-year, and, you know, and as you, you know, kind of look from Q3 forward, right, into Q4, you know, there will be some seasonality that'll just be from quarter to quarter, just, you know, Q4, is usually a big recorder for us, and sales expense commissions will be up on the higher revenue, but, you know, we have really focused on this, and taken a lot of cost out of the business this year.
Lucy Rutishauser: I think what I'd add to that is that we expect to be changes will be, you know, our permanent, right, these are not just one-time cost saves. This is us getting more efficient, us getting rid of things that we didn't need, things of that nature, so it will continue. In fact, we think we'll continue to improve all the investments that we're making this year, which is quite significant, around transformation, be it cloud, be it the unified ad platform, be it DDS, you know, then there's a number of other smaller initiatives.
Lucy Rutishauser: They're all geared around being more efficient with what we have, selling more with what we have, so either making more revenue or running the business on less expense, and so that drive greater efficiency will continue. We won't just stop after this year.
Operator: Thank you.
Operator: Once again, everyone, if you have any questions or comments, please press star then one on your phone.
Aaron Watts: Your next question is coming from Aaron Watts from Deutsche Bank. Your line is live. Everyone, thank you for having me on. Two questions for me. I guess, Chris, one more follow-up on the distribution side. You've highlighted that you have a majority of your sub-base up for renewal over the next 12 months. We've seen a couple notable blackouts between station owners and distributors and a couple elongated ones even with the NFL ongoing.
Aaron Watts: With that backdrop in post-Chartered Disney, are you bracing for more abrasive negotiations as you go into these discussions and at least compared to the past? Are you approaching them any differently? And given that we all are on the outside looking in, is the base case that we should work with is that these negotiations can get done without any prolonged blackouts? So I would actually, Aaron, challenge the notion that blackouts have increased.
Aaron Watts: I just think people are paying more attention to them. Periodic blackouts have been a common occurrence for years and I can remember plenty of times where we had much longer blackouts in the industry. But I'll tell you from a Sinclair perspective, we haven't had a single blackout on the broadcast side for multiple years. And so I don't think it would be accurate, though I haven't actually looked at the numbers myself to say that blackouts have increased.
Aaron Watts: From the very start of retrans, it's always been a battle and it continues to be one that's fought in a friendly fashion. And you know, we both need each other. And so I expect that to continue. I don't see a meaningful change in how we interact with the MAPDs for all the reasons I cited when I talked about the Disney Carter deal in terms of what's available for distributors to secure and present ours is the most desirable full stop.
Aaron Watts: So if they want to be in the video business, which they all still want to be in the video business, I assure you that they need our content. And so I don't think the marketplace has really changed that much.
Robert Weisbord: Okay, that's helpful context. And then just secondly, around the core advertising picture based on your third quarter results and fourth you guide. It seems like heading in the right direction. Is it too early to say you may be turning a corner towards more sustainable positive add trends going forward and rolling into 2024? Or is it is it a little too early to make that call? And I guess can these early positive signs like national moving towards positive traction?
Robert Weisbord: Can they be sustainable? Yeah, it's rough. I would say that we're cautiously optimistic. Auto has returned services is getting stronger, the little categories are strong retail and travel are strong. So, you know, wish I had a crystal ball, but we are optimistic that we have seen this turn around. We've gone through the pandemic. Recession, fought process, and now we've come full turn, I think that the election year makes it robust, and we're excited because everything we've been building for the last few years, including our AI, ML, pricing system, will kick in to allow us to maximize our value of our assets.
Robert Weisbord: I also think that this is a reflection of a continued shift, a long platform strategy, and the individual becoming a bigger and bigger portion of our total advertising pie, are really put a lot of work, and Rob's team has put a lot of work into transforming our sellers into marketing consultants as opposed to your sellers. That's starting to pay dividends. We live in a cross-platform solution world, and we stated earlier that we're building our assets on every single platform, and we monetize every single platform.
Robert Weisbord: So going to the 24th, we are really happy to be expanding upon our podcasting network, as well as our presence on the various social media networks with the hiring of a gentleman that came from CondiNAS and HBO Max to give a little bit different look to how we attack the social media space. So as we do the content, we also have a monetization plan to go along with it. Appreciate the thoughts, guys.
Operator: Thank you.
Operator: That concludes our Q&A session.
Christopher Ripley: I'll now hand the conference back to Chris Ripley, President and CEO for closing remarks. Please go ahead. Thank you all for joining us today, and to the extent you have any questions or comments, feel free to reach out. Thank you, everyone.
Operator: This concludes today's event. You may disconnect at this time and have a wonderful day. Thank you for your participation.