Sinclair to end boycott of Kimmel show on its ABC stations Friday

Sinclair Broadcast Group will resume airing "Jimmy Kimmel Live!" on its nearly 40 ABC-affiliated stations, representing 14% of U.S. households, reversing its prior preemption after Disney lifted the show's suspension and following pressure from lawmakers. This decision leaves Nexstar Media Group as the sole major broadcaster still not airing Kimmel on its 32 ABC stations (9% of U.S. households), a stance that aligns with earlier FCC Chair warnings against broadcasters airing the program, but also occurs as Nexstar seeks FCC approval for its $6.2 billion merger with Tegna, potentially creating complex regulatory considerations for the company.

Analysis

Sinclair Broadcast Group (SBGI) has resolved its conflict with Disney (DIS) by agreeing to resume the broadcast of "Jimmy Kimmel Live!" across its ABC-affiliated stations, which represent approximately 14% of U.S. households. This decision, which follows pressure from lawmakers, removes a significant operational and political headwind for Sinclair. In contrast, Nexstar Media Group (NXST) remains the sole major broadcaster continuing to preempt the show on its stations, covering 9% of U.S. households. This positions Nexstar in direct opposition to Disney and places its pending $6.2 billion merger with Tegna (TGNA) under a regulatory microscope. While Nexstar's stance aligns with previous warnings from the FCC Chair about potential penalties, its status as the lone holdout creates a distinct risk factor that could complicate the merger's approval process, concentrating the dispute's potential fallout squarely on the company.

Key Decisions for Investors

• Investors in Sinclair (SBGI) should view the resolution as a de-risking event that normalizes its relationship with a key content partner, Disney, and removes a source of political pressure.
• The primary risk is now concentrated in Nexstar (NXST), where the ongoing standoff could be used as leverage against the company during the FCC's review of its $6.2 billion merger with Tegna (TGNA), warranting close monitoring of any regulatory commentary.
• For Disney (DIS), the return of its programming to Sinclair's network is a modest positive, restoring distribution reach, but it is unlikely to materially impact the company's overall financial performance or investment thesis given its vast scale.