What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-11-08 compared with 2024-08-09 · 139 added, 139 removed, 244 unchanged (53% of the section changed)

2 unchanged sentences

This discussion consists of the following sections:

Summary of Significant Events — financial events during the three months ended June 30, 2024 and through the date this Report on Form 10-Q is filed.

Results of Operations — an analysis of Sinclair's and SBG's revenues and expenses for the three and six months ended June 30, 2024 and 2023.

Liquidity and Capital Resources — a discussion of Sinclair's and SBG's primary sources of liquidity and an analysis of Sinclair's and SBG's cash flows from or used in operating activities, investing activities, and financing activities during the three and six months ended June 30, 2024.

Summary of Significant Events — financial events during the three months ended September 30, 2024 and through the date this Report on Form 10-Q is filed.

Results of Operations — an analysis of Sinclair's and SBG's revenues and expenses for the three and nine months ended September 30, 2024 and 2023.

SUMMARY OF SIGNIFICANT EVENTS

Content and Distribution

• In May 2024, Sinclair reached a comprehensive, multiyear distribution agreement with Cox Communications, Inc.

for continued carriage of Tennis Channel and SBG’s owned local broadcast stations.

• In August and September 2024, Sinclair expanded its podcast division, launching a new slate of sports programming featuring top athletes, coaches, and experts including “The Triple Option,” hosted by Urban Meyer, Mark Ingram II, and Rob Stone and “Throwbacks” with Matt Leinart and Jerry Ferrara.

• In the third quarter 2024, Sinclair entered into a multi-year renewal with Altice USA for continued carriage of SBG's broadcast stations and Tennis Channel on Altice's Optimum and Suddenlink owned systems.

• In the third quarter 2024, Sinclair entered into a multi-year renewal with DIRECTV for continued carriage of SBG's broadcast stations and Tennis Channel across DIRECTV, DIRECTV Stream, and U-verse.

• In October 2024, SBG launched the Rip City Television Network, a network of SBG affiliates throughout the Pacific Northwest to serve as the new television home of Trail Blazers starting with the 2024-25 season.

• In October 2024, Sinclair announced the launch of a soccer-focused podcast, "Unfiltered Soccer with Landon and Tim," featuring former U.S.

soccer stars Landon Donovan and Tim Howard.

Corporate Social Responsibility

• To date in 2024, SBG's newsrooms have won a total of 176 journalism awards.

• In April 2024, WBFF FOX 45 and the David D.

Smith Family Foundation donated $50 thousand and $100 thousand, respectively, to the Maryland Tough Baltimore Strong Key Bridge Fund.

• In April 2024, Sinclair published its 2023 Corporate Social Responsibility report, detailing the Company's achievements and progress in its social responsibility journey.

• In April 2024, Sinclair held its second annual Sinclair Day of Service, whereby all employees were encouraged to volunteer that day for charitable causes.

Over 1,300 employees volunteered a total of more than 3,700 hours that day.

• In June 2024, Sinclair partnered with Feeding America to coordinate Sinclair Cares:

Summer Hunger Relief, an awareness and fundraising campaign to help provide meals to children and families across the U.S.

in the summer.

• In July 2024, Sinclair awarded scholarships to 12 university students as a part of its annual Diversity Scholarship program.

• In October 2024, Sinclair ran Sinclair Cares:

Hurricane Helene Relief, a fundraising partnership with the Salvation Army and The United Way to assist with humanitarian relief efforts on the ground in Western North Carolina, South Carolina, Georgia, Florida, Virginia, and Tennessee in the aftermath of Hurricanes Helene and Milton.

Including Sinclair's corporate donation of $50,000, the campaign raised nearly $1.3 million in donations designated for delivering emergency aid, including food, water, shelter, and cleanup kits.

• To date in 2024, SBG's newsrooms have won a total of 196 journalism awards.

NextGen Broadcast (ATSC 3.0)

• In April 2024, Sinclair announced the launch of its Broadspan datacasting platform to enable data distribution capability across all current Sinclair NextGen Broadcast (ATSC 3.0) markets where it serves as the host station and announced its first go to market partner, leading a content delivery network.

• In 2024, Sinclair, in coordination with other broadcasters, and led by BitPath, its joint venture with another broadcaster, has deployed NextGen TV, powered by ATSC 3.0, in the two markets below.

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Financing, Capital Allocation, and Shareholder Returns

• In May 2024, Sinclair declared a quarterly dividend of $0.25 per share and in August 2024, Sinclair declared a quarterly dividend of $0.25 per share.

• In January 2024, Sinclair announced that it had agreed to a global settlement and release of all claims associated with the litigation filed by DSG and DSG’s wholly-owned subsidiary, Diamond Sports Net, LLC, in July 2023 and on March 1, 2024, the court approved the settlement.

The settlement terms included Sinclair’s cash payment to DSG of $495 million.

Additionally, under the terms of the settlement, Sinclair would provide transition services to DSG to allow DSG to become a self-standing entity going forward.

An initial payment of $50 million was made in March 2024, which was funded by Ventures, and the remaining $445 million was paid in April 2024, of which $347 million was paid by STG and $98 million was paid by Ventures.

• In May 2024, Jason Smith was promoted to Executive Vice Chairman of the Company from his former position of Vice President, Chief of Staff.

• In August 2024, Sinclair declared a quarterly dividend of $0.25 per share and in November 2024, Sinclair declared a quarterly dividend of $0.25 per share.

SINCLAIR, INC.

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RESULTS OF OPERATIONS

Any references to the first, third, or fourth quarters are to the three months ended March 31, September 30, or December 31, respectively, for the year being discussed.

As of June 30, 2024, we had two reportable segments for accounting purposes, local media and tennis.

Any references to the first, second, or fourth quarters are to the three months ended March 31, June 30, or December 31, respectively, for the year being discussed.

As of September 30, 2024, we had two reportable segments for accounting purposes, local media and tennis.

Seasonality / Cyclicality

8 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

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Corporate general and administrative expenses 41 45 149 165

Loss on asset dispositions and other, net of impairment 2 5 2 11

Operating income (loss) $ 64 $ (3) $ 106 $ 18

Loss on deconsolidation of subsidiary — 10 — 10

(Gain) loss on asset dispositions and other, net of impairment (13) — (11) 11

Operating income $ 179 $ 37 $ 285 $ 55

Net income (loss) attributable to Sinclair

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The following table sets forth our revenue and expenses for our local media segment for the periods presented (in millions):

Three Months Ended June 30, Percent Change Increase / (Decrease) Six Months Ended June 30, Percent Change Increase / (Decrease)

Three Months Ended September 30, Percent Change Increase / (Decrease) Nine Months Ended

September 30, Percent Change Increase / (Decrease)

2024 2023 2024 2023

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Gain on asset dispositions and other, net of impairment (11) (2) n/m (11) (5) n/m

Operating income $ 83 $ 22 n/m $ 124 $ 63 97%

Operating income $ 182 $ 53 n/m $ 306 $ 116 n/m

Interest expense including amortization of debt discount and deferred financing costs $ 78 $ 77 1% $ 230 $ 227 1%

2 unchanged sentences

n/m - not meaningful

(a) Includes $3 million and $5 million for the three and six months ended June 30, 2024, respectively, and $1 million and $2 million for the three and six months ended June 30, 2023, respectively, of intercompany revenue related to certain services provided to the tennis segment, which is eliminated in consolidation.

(b) Includes $3 million and $5 million for the three and six months ended June 30, 2024, respectively, and $2 million and $3 million for the three and six months ended June 30, 2023, respectively, of intercompany expense related to certain services provided by other, which is eliminated in consolidation.

(a) Includes $2 million and $7 million for the three and nine months ended September 30, 2024, respectively, and $2 million and $4 million for the three and nine months ended September 30, 2023, respectively, of intercompany revenue related to certain services provided to the tennis segment, which is eliminated in consolidation.

(b) Includes $4 million and $9 million for the three and nine months ended September 30, 2024, respectively, and $2 million and $5 million for the three and nine months ended September 30, 2023, respectively, of intercompany expense related to certain services provided by other, which is eliminated in consolidation.

Distribution revenue.

Distribution revenue, which represents payments from Distributors for our broadcast signals, increased $12 million or 3% and $15 million or 2% for the three and six months ended June 30, 2024, respectively, when compared to the same periods in 2023.

Contractual rate increases favorably impacted period-over-period distribution revenue by mid-teen percentages for both the three and six months ended June 30, 2024, respectively, which was offset by a decrease in subscribers by low double-digit percentages for both periods, respectively.

Distribution revenue, which represents fees earned from Distributors for our broadcast signals, increased $18 million or 5% and $33 million or 3% for the three and nine months ended September 30, 2024, respectively, when compared to the same periods in 2023.

Contractual rate increases favorably impacted period-over-period distribution revenue by high-teen percentages for the three months ended September 30, 2024 and by mid-teen percentages for the nine months ended September 30, 2024.

The increase in distribution revenue was offset by a decrease in subscribers by low double-digit percentages for both periods, respectively.

Core advertising revenue.

Core advertising revenue decreased $2 million for the three months ended June 30, 2024, when compared to the same period in 2023.

Core advertising revenue decreased $11 million for the six months ended June 30, 2024, when compared to the same period in 2023, with no particular product/services category dominating the variance.

Core advertising revenue increased $2 million and decreased $9 million for the three and nine months ended September 30, 2024, respectively, when compared to the same periods in 2023, with no particular product/services category dominating the variance.

Political advertising revenue.

Political advertising revenue increased $34 million and $55 million for the three and six months ended June 30, 2024, respectively, when compared to the same periods in 2023, primarily due to 2024 being a presidential political year, compared to 2023 which was an off-year election cycle, and therefore only had a small number of political races and correspondingly less political advertising spend.

Other media revenues.

Other media revenues increased $7 million and $14 million for the three and six months ended June 30, 2024, respectively, when compared to the same periods in 2023, primarily due to an increase related to providing

Political advertising revenue increased $127 million and $182 million for the three and nine months ended September 30, 2024, respectively, when compared to the same periods in 2023, primarily due to 2024 being a presidential political year, compared to 2023 which was an off-year election cycle, and therefore only had a small number of political races and correspondingly less political advertising spend.

SINCLAIR, INC.

RESULTS OF OPERATIONS

certain services under management services agreements.

Other media revenues.

Other media revenues increased $1 million and $15 million for the three and nine months ended September 30, 2024, respectively, when compared to the same periods in 2023, primarily due to an increase related to providing certain services under management services agreements.

The following table sets forth our primary types of programming and their approximate percentages of advertising revenue for the periods presented:

Percent of Advertising Revenue for the

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

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Percent of Advertising Revenue for the

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

# of Channels 2024 2023 2024 2023

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Media programming and production expenses.

Media programming and production expenses increased $13 million and $25 million for the three and six months ended June 30, 2024, respectively, when compared to the same periods in 2023, primarily due to an increase in fees pursuant to network affiliation agreements as a result of increased contractual rates.

Media programming and production expenses increased $13 million and $38 million for the three and nine months ended September 30, 2024, respectively, when compared to the same periods in 2023, primarily due to an increase in fees pursuant to network affiliation agreements as a result of increased contractual rates.

Media selling, general and administrative expenses.

Media selling, general and administrative expenses increased $3 million for the three months ended June 30, 2024, when compared to the same period in 2023, primarily due to an increase in third-party fulfillment costs from our digital business as a result of increased digital revenues.

Media selling, general and administrative expenses increased $11 million for the six months ended June 30, 2024, when compared to the same period in 2023, primarily due to a $4 million increase in third-party fulfillment cost from our digital business as a result of increased digital revenues, a $2 million increase in national sale commissions, and a $1 million increase in trade related expenses.

Media selling, general and administrative expenses increased $24 million for the three months ended September 30, 2024, when compared to the same period in 2023, primarily due to a $7 million increase in third-party fulfillment costs from our digital business as a result of increased digital revenues, a $6 million increase in national sale commissions due to an increase in national advertising sales, a $5 million increase in employee compensation cost, and a $2 million increase in both information technology costs and credit card processing fees due to the increase in advertising revenue.

Media selling, general and administrative expenses increased $35 million for the nine months ended September 30, 2024, when compared to the same period in 2023, primarily due to an $11 million increase in third-party fulfillment costs from our digital business as a result of increased digital revenues, an $8 million increase in national sale commissions due to an increase in national advertising sales, a $6 million increase in employee compensation cost, a $3 million increase in credit card processing fees due to an increase in advertising revenue, and a $1 million increase in trade related expenses.

Amortization of program costs.

The amortization of program costs decreased $1 million and $4 million for the three and six months ended June 30, 2024, respectively, when compared to the same periods in 2023, primarily related to reduced programming renewal costs.

The amortization of program costs remained flat for the three months ended September 30, 2024, when compared to the same period in 2023.

The amortization of program costs decreased $4 million for the nine months ended September 30, 2024, when compared to the same period in 2023, primarily related to reduced programming renewal costs.

Corporate general and administrative expenses.

See explanation under Corporate and Unallocated Expenses.

Non-media expenses.

Non-media expenses decreased $1 million and $5 million for the three and six months ended June 30, 2024, respectively, when compared to the same periods in 2023, primarily related to decreased expenses associated with our broadcast technology related initiatives.

Interest expense including amortization of debt discount and deferred financing costs.

Interest expense remained flat for the three months ended June 30, 2024, when compared to the same period in 2023.

Interest expense increased $2 million for the six months ended June 30, 2024, when compared to the same period in 2023, primarily due to increased interest expense related to our variable rate debt resulting from higher interest rates.

SINCLAIR, INC.

RESULTS OF OPERATIONS

Interest expense including amortization of debt discount and deferred financing costs.

Interest expense increased $1 million and $3 million for the three and nine months ended September 30, 2024, respectively, when compared to the same periods in 2023, primarily due to increased interest expense related to our variable rate debt resulting from higher interest rates.

Other income, net.

During the six months ended June 30, 2024, we recognized a $26 million gain related to the sale of certain broadcast related assets and $8 million in interest income.

During the nine months ended September 30, 2024, we recognized a $26 million gain related to the sale of certain broadcast related assets and $9 million in interest income.

Tennis Segment

The following table sets forth our revenue and expenses for our tennis segment for the periods presented (in millions):

Three Months Ended June 30, Percent Change Increase / (Decrease) Six Months Ended June 30, Percent Change Increase / (Decrease)

Three Months Ended September 30, Percent Change Increase / (Decrease) Nine Months Ended

September 30, Percent Change Increase / (Decrease)

2024 2023 2024 2023

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Core advertising revenue 8 9 (11)% 32 32 —%

Other media revenues 2 — n/m 3 1 n/m

Other media revenues 1 1 —% 4 2 n/m

Media revenues 60 59 2% 190 174 9%

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Depreciation and amortization expenses 5 5 —% 16 15 7%

Corporate general and administrative expenses — — n/m 1 — n/m

Corporate general and administrative expenses 1 1 —% 2 1 n/m

Operating income $ 11 $ 13 (15)% $ 32 $ 34 (6)%

n/m - not meaningful

(a) Includes $3 million and $5 million for the three and six months ended June 30, 2024, respectively, and $1 million and $2 million for the three and six months ended June 30, 2023, respectively, of intercompany expense related to certain services provided by the local media segment, which is eliminated in consolidation.

(a) Includes $2 million and $7 million for the three and nine months ended September 30, 2024, respectively, and $2 million and $4 million for the three and nine months ended September 30, 2023, respectively, of intercompany expense related to certain services provided by the local media segment, which is eliminated in consolidation.

Distribution revenue.

Distribution revenue, which is generated through fees received from Distributors for the right to distribute Tennis Channel, increased $5 million or 11% and $12 million or 13% for the three and six months ended June 30, 2024, respectively, when compared to the same periods in 2023.

Contractual rate increases favorably impacted period-over-period distribution revenue by low double-digit percentages for both the three and six months ended June 30, 2024, respectively, and subscriber increases favorably impacted period-over-period distribution revenue by high-teen percentages for both periods, respectively, which was due to carriage agreements with new Distributors in the second quarter of 2023 and first quarter of 2024.

This increase in subscribers was offset by a decrease in subscribers from existing Distributors of mid-teen percentages for both periods, respectively.

Distribution revenue, which is generated through fees earned from Distributors for the right to distribute Tennis Channel, increased $2 million or 4% and $14 million or 10% for the three and nine months ended September 30, 2024, respectively, when compared to the same periods in 2023.

Contractual rate increases favorably impacted period-over-period distribution revenue by low double-digit percentages for both the three and nine months ended September 30, 2024.

The increase in distribution revenue was offset by a decrease in subscribers by single-digit percentages for both periods, respectively.

Core advertising revenue.

Core advertising revenue is primarily generated from sales of commercial time within Tennis Channel programming.

Core advertising revenue remained flat for the three months ended June 30, 2024, when compared to the same period in 2023.

Core advertising revenue increased $1 million for the six months ended June 30, 2024, when compared to the same period in 2023, primarily due to an increase in the number of tournaments aired in the current period versus the prior period.

Core advertising revenue decreased $1 million for the three months ended September 30, 2024, when compared to the same period in 2023, primarily due to a shift in the 2024 tournament calendar compared to the 2023 tournament calendar.

Core advertising revenue remained flat for the nine months ended September 30, 2024, when compared to the same period in 2023.

Media programming and production expenses.

Media programming and production expenses increased $3 million and $6 million for the three and six months ended June 30, 2024, respectively, when compared to the same periods in 2023, primarily due to an increase in live production expenses related to an increase in the number of tournaments aired in the current periods versus the prior periods.

Media programming and production expenses increased $1 million and $7 million for the three and nine months ended September 30, 2024, respectively, when compared to the same periods in 2023, primarily due to an increase in live production expenses related to an increase in the number of tournaments aired in the current periods versus the prior periods.

SINCLAIR, INC.

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Media selling, general and administrative expenses.

Media selling, general and administrative expenses increased $5 million and $7 million for the three and six months ended June 30, 2024, respectively, when compared to the same periods in 2023, primarily due to an increase in expenses related to certain services provided by the local media segment, which is eliminated in consolidation, and employee compensation cost.

Media selling, general and administrative expenses increased $2 million for the three months ended September 30, 2024, when compared to the same period in 2023, primarily due to an increase in employee compensation cost.

Media selling, general and administrative expenses increased $9 million for the nine months ended September 30, 2024, when compared to the same period in 2023, primarily due to an increase in expenses related to certain services provided by the local media segment, which is eliminated in consolidation, and employee compensation cost.

Corporate general and administrative expenses.

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The following table sets forth our revenues and expenses for our non-broadcast digital and internet solutions, technical services, and non-media investments (collectively, other) for the periods presented (in millions):

Three Months Ended June 30, Percent Change Increase / (Decrease) Six Months Ended June 30, Percent Change Increase/(Decrease)

Three Months Ended September 30, Percent Change Increase / (Decrease) Nine Months Ended

September 30, Percent Change Increase/(Decrease)

2024 2023 2024 2023

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Non-media expenses (d) $ 12 $ 13 (8)% $ 36 $ 26 38%

Operating loss $ — $ (12) n/m $ (3) $ (24) (88)%

Income (loss) from equity method investments $ 78 $ (1) n/m $ 93 $ 30 n/m

Operating income (loss) $ 1 $ (7) n/m $ (2) $ (31) (94)%

Income from equity method investments $ — $ — n/m $ 93 $ 30 n/m

n/m - not meaningful

(a) Media revenues for the three and six months ended June 30, 2024 include $3 million and $5 million, respectively, and for the three and six months ended June 30, 2023 include $2 million and $3 million, respectively, of intercompany revenue related to certain services and sales provided to the local media segment, which is eliminated in consolidation.

(b) Non-media revenues for the three and six months ended June 30, 2024 and 2023 include $1 million and $4 million, respectively, and for the three and six months ended June 30, 2023 include $1 million and $2 million, respectively, of intercompany revenue related to certain services and sales provided to the local media segment, which is eliminated in consolidation.

(c) Media expenses for the three and six months ended June 30, 2023 include $1 million and $2 million, respectively, of intercompany expense primarily related to certain services provided by the local media segment, which is eliminated in consolidation.

(d) Non-media expenses for the three and six months ended June 30, 2024 include $1 million and $3 million, respectively, and for the three and six months ended June 30, 2023 include $1 million and $2 million, respectively, of intercompany expense related to certain services and sales provided by the local media segment, which is eliminated in consolidation.

Media revenues increased $3 million for the three months ended June 30, 2024, when compared to the same period in 2023, primarily due to an increase in advertising revenue related to our digital initiatives.

Media revenues remained flat for the six months ended June 30, 2024, when compared to the same period in 2023.

Non-media revenues increased $3 million and $4 million for the three and six months ended June 30, 2024, respectively, when compared to the same periods in 2023, primarily due to an increase in broadcast equipment sales.

Media expenses decreased $6 million and $15 million for the three and six months ended June 30, 2024, respectively, when compared to the same periods in 2023, primarily due to the sale of our Stadium Network.

Non-media expenses increased $5 million and $11 million for the three and six months ended June 30, 2024, respectively, when compared to the same periods in 2023, primarily due to an increase in expenses related to our technical services business and an increase in expenses associated with higher broadcast equipment sales.

Income (loss) from equity method investments.

During the three and six months ended June 30, 2024, we recognized gains of $78 million and $93 million, respectively, related to the sale of one of our investments, which is included in income (loss) from equity method investments in our consolidated statements of operations.

During the six months ended June 30, 2023 we recognized a gain of $33 million on the sale of two of our real estate investments, which is included in income (loss) from equity method investments in our consolidated statements of operations.

(a) Media revenues for the three and nine months ended September 30, 2024 include $4 million and $9 million, respectively, and for the three and nine months ended September 30, 2023 include $2 million and $5 million, respectively, of intercompany revenue related to certain services and sales provided to the local media segment, which is eliminated in consolidation.

(b) Non-media revenues for the three and nine months ended September 30, 2024 include $1 million and $5 million, respectively, and for the three and nine months ended September 30, 2023 include $2 million and $4 million, respectively, of intercompany revenue related to certain services and sales provided to the local media segment, which is eliminated in consolidation.

(c) Media expenses for the nine months ended September 30, 2023 include $2 million of intercompany expense primarily related to certain services provided by the local media segment, which is eliminated in consolidation.

(d) Non-media expenses for the nine months ended September 30, 2024 include $3 million and for the three and nine months ended September 30, 2023 include $1 million and $2 million, respectively, of intercompany expense related to certain services and sales provided by the local media segment, which is eliminated in consolidation.

Media revenues increased $3 million for both the three and nine months ended September 30, 2024, when compared to the same periods in 2023, primarily due to an increase in advertising revenue related to our digital initiatives.

Non-media revenues increased $3 million for the nine months ended September 30, 2024, when compared to the same period in 2023, primarily due to an increase in broadcast equipment sales.

Media expenses increased $1 million for the three months ended September 30, 2024, when compared to the same period in 2023, primarily due to an increase in selling, general and administrative expenses related to our digital initiatives.

Media expenses decreased $14 million for the nine months ended September 30, 2024, when compared to the same period in 2023, primarily due to the sale of Stadium Network.

Non-media expenses increased $10 million for the nine months ended September 30, 2024, when compared to the same period in 2023, primarily due to an increase in expenses related to our technical services business and an increase in expenses associated with higher broadcast equipment sales.

Income from equity method investments.

During the nine months ended September 30, 2024, we recognized a gain of $93 million related to the sale of one of our investments, which is included in income from equity method investments in our consolidated statements of operations.

During the nine months ended September 30, 2023, we recognized a gain of $33 million on the sale of two of our real estate investments, which is included in income from equity method investments in our consolidated statements of operations.

SINCLAIR, INC.

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The following table presents our corporate and unallocated expenses for the periods presented (in millions):

Three Months Ended June 30, Percent

Increase/ (Decrease) Six Months Ended June 30, Percent

Three Months Ended

September 30, Percent

Increase/ (Decrease) Nine Months Ended

September 30, Percent

Increase/ (Decrease)

5 unchanged sentences

The table above and the explanation that follows cover total consolidated corporate general and administrative expenses.

Corporate general and administrative expenses decreased $12 million for both the three and six months ended June 30, 2024, when compared to the same periods in 2023, primarily due to a decrease in legal, consulting, and regulatory costs, primarily related to the litigation discussed under Note 5.

Commitments and Contingencies within Sinclair's Consolidated Financial Statements.

Corporate general and administrative expenses decreased $4 million and $16 million for the three and nine months ended September 30, 2024, respectfully, when compared to the same periods in 2023, primarily due to a decrease in legal, consulting, and regulatory costs, primarily related to the litigation discussed under Note 5.

Commitments and Contingencies within Sinclair's Consolidated Financial Statements, partially offset by an increase in employee compensation cost.

Income tax (provision) benefit.

The effective tax rate for the three months ended June 30, 2024, was a provision of 19.0% as compared to a benefit of 18.9% during the same period in 2023.

The effective tax rate for the three months ended September 30, 2024 was a provision of 23.0% as compared to a benefit of 20.7% during the same period in 2023.

The change from benefit to provision is primarily due to a book loss in 2023 compared to book income in 2024.

The effective tax rate for the six months ended June 30, 2024, was a provision of 1.7% as compared to a benefit of 189.3% during the same period in 2023.

The decrease in the effective tax rate for the six months ended June 30, 2024, as compared to the same period in 2023, is primarily due to a release of the 2023 valuation allowance on deferred tax assets relating to deductibility of interest expense under the IRC Section 163(j) as a result of the change in the tax classification of the legal entity owning the DSG business because of the exit of the sole minority investor.

The effective tax rate for the nine months ended September 30, 2024 was a provision of 17.4% as compared to a benefit of 134.3% during the same period in 2023.

The decrease in the effective tax rate for the nine months ended September 30, 2024, as compared to the same period in 2023, is primarily due to a release of the 2023 valuation allowance on deferred tax assets relating to deductibility of interest expense under the IRC Section 163(j) as a result of the change in the tax classification of the legal entity owning the DSG business because of the exit of the sole minority investor.

SINCLAIR BROADCAST GROUP, LLC RESULTS OF OPERATIONS

Any references to the first, third, or fourth quarters are to the three months ended March 31, September 30, or December 31, respectively, for the year being discussed.

As of June 30, 2024, SBG had one reportable segment for accounting purposes, local media.

Any references to the first, second, or fourth quarters are to the three months ended March 31, June 30, or December 31, respectively, for the year being discussed.

As of September 30, 2024, SBG had one reportable segment for accounting purposes, local media.

Seasonality / Cyclicality

6 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

8 unchanged sentences

Corporate general and administrative expenses 24 31 100 147

Loss on asset dispositions and other, net of impairment — 4 — 10

Loss on deconsolidation of subsidiary — 10 — 10

(Gain) loss on asset dispositions and other, net of impairment (11) (3) (11) 7

Operating income $ 182 $ 44 $ 300 $ 69

1 unchanged sentence

Local Media Segment

Refer to Local Media Segment above under Sinclair, Inc.'s Results of Operations for a discussion of SBG's local media segment, which is the same as Sinclair's local media segment for all of the three and six months ended June 30, 2024 and 2023.

SINCLAIR BROADCAST GROUP, LLC RESULTS OF OPERATIONS

The following table sets forth SBG's revenues and expenses for tennis, non-broadcast digital and internet solutions, technical services, and non-media investments (collectively, other) for the periods presented, prior to the Reorganization (in millions):

Three Months Ended June 30, Six Months Ended June 30,

The following table sets forth SBG's revenues and expenses for tennis, non-broadcast digital and internet solutions, technical services, and non-media investments (collectively, other) for the period presented, prior to the Reorganization (in millions):

Nine Months Ended September 30,

Distribution revenue $ 76

7 unchanged sentences

Loss on asset dispositions and other, net of impairment $ 13

Operating loss $ (4) $ —

Income from equity method investments $ 31

(a) Media revenues for the three and six months ended June 30, 2023 include $2 million and $3 million, respectively, of intercompany revenue related to certain services and sales provided to the local media segment, which is eliminated in consolidation.

(b) Non-media revenues for the six months ended June 30, 2023 include $1 million of intercompany revenue related to certain services and sales provided to the local media segment, which is eliminated in consolidation.

(c) Media expenses for the six months ended June 30, 2023 include $1 million of intercompany expense primarily related to certain services provided by the local media segment, which is eliminated in consolidation.

(d) Non-media expenses for both the three and six months ended June 30, 2023 include $1 million of intercompany expense related to certain services and sales provided by the local media segment, which is eliminated in consolidation.

The revenue and expense items noted above for the three and six months ended June 30, 2023 represent activity prior to the Reorganization which occurred June 1, 2023, thus there is no activity presented for periods subsequent to May 31, 2023.

(a) Media revenues for the nine months ended September 30, 2023 include $3 million of intercompany revenue related to certain services and sales provided to the local media segment, which is eliminated in consolidation.

(b) Non-media revenues for the nine months ended September 30, 2023 include $1 million of intercompany revenue related to certain services and sales provided to the local media segment, which is eliminated in consolidation.

(c) Media expenses for the nine months ended September 30, 2023 include $1 million of intercompany expense primarily related to certain services provided by the local media segment, which is eliminated in consolidation.

(d) Non-media expenses for the nine months ended September 30, 2023 include $1 million of intercompany expense related to certain services and sales provided by the local media segment, which is eliminated in consolidation.

The revenue and expense items noted above for the nine months ended September 30, 2023 represent activity prior to the Reorganization which occurred June 1, 2023, thus there is no activity presented for periods subsequent to May 31, 2023.

See Company Reorganization under Note 1.

Nature of Operations and Summary of Significant Accounting Policies within SBG's Consolidated Financial Statements.

SINCLAIR BROADCAST GROUP, LLC RESULTS OF OPERATIONS

Corporate and Unallocated Expenses

The following table presents SBG's corporate and unallocated expenses for the periods presented (in millions):

Three Months Ended June 30, Percent

Increase/ (Decrease) Six Months Ended June 30, Percent

Three Months Ended

September 30, Percent

Increase/ (Decrease) Nine Months Ended

September 30, Percent

Increase/ (Decrease)

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Corporate general and administrative expenses $ 24 $ 31 (23)% $ 100 $ 147 (32)%

Income tax benefit $ 1 $ 26 (96)% $ 10 $ 230 (96)%

Income tax (provision) benefit $ (25) $ 6 n/m $ (15) $ 236 n/m

n/m - not meaningful

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The table above and the explanation that follows cover total consolidated corporate general and administrative expenses.

Corporate general and administrative expenses decreased by $23 million and $40 million for the three and six months ended June 30, 2024, respectively, when compared to the same periods in 2023, primarily due to a decrease in legal, consulting, and regulatory costs, primarily related to the litigation discussed under Note 5.

Corporate general and administrative expenses decreased by $7 million and $47 million for the three and nine months ended September 30, 2024, respectively, when compared to the same periods in 2023, primarily due to a decrease in legal, consulting, and regulatory costs, primarily related to the litigation discussed under Note 5.

Commitments and Contingencies within SBG's Consolidated Financial Statements.

Income tax benefit.

The effective tax rate for the three months ended June 30, 2024, was a benefit of 38.5% as compared to a benefit of 21.5% during the same period in 2023.

The increase in the effective tax rate for the three months ended June 30, 2024, as compared to the same period in 2023, is primarily due to accrual of interest income attributable to prior years’ pending income tax refund claims.

The effective tax rate for the six months ended June 30, 2024, was a benefit of 1717.7% as compared to a benefit of 169.9% during the same period in 2023.

The increase in the effective tax rate for the six months ended June 30, 2024, as compared to the same period in 2023, is primarily due to accrual of interest income attributable to prior years’ pending income tax refund claims.

The effective income tax rate for the three months ended June 30, 2023 was less than the statutory rate primarily due to a release of the 2023 valuation allowance on deferred tax assets relating to deductibility of interest expense under the IRC Section 163(j) as a result of the change in the tax classification of the legal entity owning the DSG business because of the exit of the sole minority investor.

Income tax (provision) benefit.

The effective tax rate for the three months ended September 30, 2024 was a provision of 22.8% as compared to a benefit of 18.9% during the same period in 2023.

The change from benefit to provision is primarily due to a book loss in 2023 compared to book income in 2024.

SINCLAIR BROADCAST GROUP, LLC RESULTS OF OPERATIONS

The effective tax rate for the nine months ended September 30, 2024, was a provision of 13.6% as compared to a benefit of 144.6% during the same period in 2023.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity and Capital Resources

As of June 30, 2024, Sinclair had net working capital of approximately $536 million, including $378 million in cash and cash equivalent balances, and $228 million of available borrowing capacity.

As of September 30, 2024, Sinclair had net working capital of approximately $646 million, including $536 million in cash and cash equivalent balances, and $650 million of available borrowing capacity.

Cash on hand, cash generated by Sinclair's operations, and borrowing capacity under the Bank Credit Agreement are used as Sinclair's primary sources of liquidity.

As of June 30, 2024, SBG had net working capital of approximately $158 million, including $52 million in cash and cash equivalent balances, and $228 million of available borrowing capacity.

As of September 30, 2024, SBG had net working capital of approximately $238 million, including $202 million in cash and cash equivalent balances, and $650 million of available borrowing capacity.

Cash on hand, cash generated by SBG's operations, and borrowing capacity under the Bank Credit Agreement are used as SBG's primary sources of liquidity.

The bank credit agreement of Sinclair Television Group, Inc.

("STG"), a wholly-owned subsidiary of SBG (the "Bank Credit Agreement"), includes a financial maintenance covenant, the first lien leverage ratio (as defined in the Bank Credit Agreement), which requires such ratio not to exceed 4.5x, measured as of the end of each fiscal quarter, which is only applicable if 35% or more of the capacity (as a percentage of total commitments) under the revolving credit facility, measured as of the last day of each fiscal quarter, is utilized under the revolving credit facility as of such date.

Since there was no utilization under the revolving credit facility as of June 30, 2024, STG was not subject to the financial maintenance covenant under the Bank Credit Agreement.

As of June 30, 2024, the STG first lien leverage ratio was above 4.5x, which effectively reduces STG's borrowing capacity under the revolving credit facility from $650 million to $228 million.

The Bank Credit Agreement contains other restrictions and covenants with which STG was in compliance as of June 30, 2024.

During the six months ended June 30, 2024, STG purchased $27 million aggregate principal amount of the Term Loan B-2, due September 30, 2026, for consideration of $25 million.

During the six months ended June 30, 2024, Sinclair and SBG entered into agreements which increased estimated contractual amounts owed for network programming rights by $1,573 million which have terms that extend into 2027.

There were no other material changes to Sinclair's or SBG's contractual cash obligations as of June 30, 2024.

The Bank Credit Agreement of STG, a wholly-owned subsidiary of SBG, includes a financial maintenance covenant, the first lien leverage ratio (as defined in the Bank Credit Agreement), which requires such ratio not to exceed 4.5x, measured as of the end of each fiscal quarter, which is only applicable if 35% or more of the capacity (as a percentage of total commitments) under the revolving credit facility, measured as of the last day of each fiscal quarter, is utilized under the revolving credit facility as of such date.

Since there was no utilization under the revolving credit facility as of September 30, 2024, STG was not subject to the financial maintenance covenant under the Bank Credit Agreement.

As of September 30, 2024, the STG first lien leverage ratio was below 4.5x.

The Bank Credit Agreement contains other restrictions and covenants with which STG was in compliance as of September 30, 2024.

During the nine months ended September 30, 2024, STG purchased $27 million aggregate principal amount of the Term Loan B-2, due September 30, 2026, for consideration of $25 million.

During the nine months ended September 30, 2024, Sinclair and SBG entered into agreements which increased estimated contractual amounts owed for network programming rights by $1,592 million which have terms that extend into 2027.

There were no other material changes to Sinclair's or SBG's contractual cash obligations as of September 30, 2024.

Sinclair and SBG anticipate that existing cash and cash equivalents, cash flow from the local media segment's operations, and borrowing capacity under the Bank Credit Agreement will be sufficient to satisfy the local media segment's debt service obligations, capital expenditure requirements, and working capital needs for the next twelve months.

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The following table sets forth Sinclair's cash flows for the periods presented (in millions):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Net cash flows (used in) from operating activities $ (306) $ 80 $ (310) $ 142

Cash flows from investing activities:

Net cash flows from (used in) operating activities $ 210 $ 1 $ (100) $ 143

Cash flows (used in) from investing activities:

Acquisition of property and equipment $ (17) $ (30) $ (61) $ (70)

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Other, net 1 2 3 6

Net cash flows from investing activities $ 56 $ 173 $ 110 $ 129

Net cash flows (used in) from investing activities $ (24) $ (32) $ 86 $ 97

Cash flows used in financing activities:

7 unchanged sentences

Operating Activities

Net cash flows used in Sinclair's operating activities increased during both the three and six months ended June 30, 2024, when compared to the same periods in 2023, primarily due to the payment of the DSG settlement, an increase in production and overhead costs, and a decrease in cash collections from Distributors, partially offset by an increase in cash collections related to political revenue.

Net cash flows from Sinclair's operating activities increased for the three months ended September 30, 2024, when compared to the same period in 2023, primarily due to an increase in cash collections related to political revenue and Distributors, partially offset by an increase in production and overhead costs.

Net cash flows used in Sinclair's operating activities increased for the nine months ended September 30, 2024, when compared to the same period in 2023, primarily due to the payment of the DSG settlement and an increase in production and overhead costs, partially offset by an increase in cash collections related to political revenue and Distributors.

Investing Activities

Net cash flows from Sinclair's investing activities decreased during the three months ended June 30, 2024, when compared to the same period in 2023, primarily due to a decrease in distributions and proceeds from investments and an increase in purchases of investments.

Net cash flows from Sinclair's investing activities decreased during the six months ended June 30, 2024, when compared to the same period in 2023, primarily due to a decrease in the distributions and proceeds from investments.

Net cash flows used in Sinclair's investing activities decreased for the three months ended September 30, 2024, when compared to the same period in 2023, primarily due to a decrease in the acquisition of property and equipment in the current period, partially offset by an increase in purchases of investments in the current period.

Net cash flows from Sinclair's investing activities decreased for the nine months ended September 30, 2024, when compared to the same period in 2023, primarily due to a decrease in the distributions and proceeds from investments in the current period, partially offset by a decrease in the acquisition of property and equipment in the current period.

Financing Activities

Net cash flows used in Sinclair's financing activities decreased during the three months ended June 30, 2024, when compared to the same period in 2023, primarily due to the repurchase of outstanding Common Stock in the prior period and a decrease in the repayment of debt in the current period.

Net cash flows used in Sinclair's financing activities decreased during the six months ended June 30, 2024, when compared to the same period in 2023, primarily due to the repurchase of outstanding Common Stock and the redeemable subsidiary preferred equity in the prior period.

Net cash flows used in Sinclair's financing activities decreased for the three months ended September 30, 2024, when compared to the same period in 2023, primarily due to a decrease in the repayment of debt in the current period.

Net cash flows used in Sinclair's financing activities decreased for the nine months ended September 30, 2024, when compared to the same period in 2023, primarily due to the repurchase of outstanding Common Stock and the redeemable subsidiary preferred equity in the prior period and a decrease in the repayment of debt in the current period.

LIQUIDITY AND CAPITAL RESOURCES

Sinclair declared a quarterly dividend of $0.25 per share in May 2024 and $0.25 per share in August 2024.

Sinclair declared a quarterly dividend of $0.25 per share in August 2024 and $0.25 per share in November 2024.

Future dividends on Sinclair's shares of common stock, if any, will be at the discretion of Sinclair's Board of Directors and will depend on several factors including Sinclair's results of operations, cash requirements and surplus, financial condition, covenant restrictions, and other factors that Sinclair's Board of Directors may deem relevant.

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The following table sets forth SBG's cash flows for the periods presented (in millions):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Net cash flows (used in) from operating activities $ (329) $ 60 $ (312) $ 122

Net cash flows from (used in) operating activities $ 226 $ 50 $ (86) $ 172

Cash flows (used in) from investing activities:

4 unchanged sentences

Net cash flows (used in) from investing activities $ (2) $ (28) $ (20) $ 102

Cash flows from (used in) financing activities:

Cash flows used in financing activities:

Repayments of notes payable, commercial bank financing, and finance leases $ (8) $ (39) $ (51) $ (76)

5 unchanged sentences

Other, net — — — (3)

Net cash flows from (used in) financing activities $ 67 $ (489) $ 63 $ (768)

Net cash flows used in financing activities $ (74) $ (111) $ (11) $ (879)

Operating Activities

Net cash flows used in SBG's operating activities increased during both the three and six months ended June 30, 2024, when compared to the same periods in 2023, primarily due to the payment of the DSG settlement, an increase in production and overhead costs, and a decrease in cash collections from Distributors, partially offset by an increase in cash collections related to political revenue, as well as the impact of the Reorganization, as discussed in Company Reorganization under Note 1.

Net cash flows from SBG's operating activities increased for the three months ended September 30, 2024, when compared to the same period in 2023, primarily due to an increase in cash collections related to political revenue and Distributors, partially offset by an increase in production and overhead costs.

Net cash flows used in SBG's operating activities increased for the nine months ended September 30, 2024, when compared to the same period in 2023, primarily due to the payment of the DSG settlement and an increase in production and overhead costs, partially offset by an increase in cash collections related to political revenue and Distributors, as well as the impact of the Reorganization, as discussed in Company Reorganization under Note 1.

Nature of Operations and Summary of Significant Accounting Policies within SBG's Consolidated Financial Statements.

Investing Activities

Net cash flows used in SBG's investing activities increased during the three months ended June 30, 2024, when compared to the same period in 2023, primarily due to the $193 million A/R Facility principal payment received from DSPV in the prior period.

Net cash flows used in SBG's investing activities increased during the six months ended June 30, 2024, when compared to the same period in 2023, primarily due to the $193 million A/R Facility principal payment received from DSPV in the prior period, offset by a decrease in the purchases of investments, as a result of the Reorganization, as discussed in Company Reorganization under Note 1.

Nature of Operations and Summary of Significant Accounting Policies within SBG's Consolidated Financial Statements .

Net cash flows used in SBG's investing activities decreased for the three months ended September 30, 2024, when compared to the same period in 2023, primarily due to an increase in distributions and proceeds from investments and a decrease in the acquisition of property and equipment in the current period.

Net cash flows used in SBG's investing activities increased for the nine months ended September 30, 2024, when compared to the same period in 2023, primarily due to the $193 million A/R Facility principal payment received from DSPV in the prior period, offset by a decrease in the purchases of investments in the current period, as a result of the Reorganization, as discussed in Company Reorganization under Note 1.

Nature of Operations and Summary of Significant Accounting Policies within SBG's Consolidated Financial Statements , and a decrease in the acquisition of property and equipment in the current period.

LIQUIDITY AND CAPITAL RESOURCES

Financing Activities

Net cash flows from SBG's financing activities increased during the three months ended June 30, 2024, when compared to the same period in 2023, primarily due to a decrease in the repayment of debt and an increase in net contributions from member as a result of the Reorganization, as discussed in Company Reorganization under Note 1.

Net cash flows from SBG's financing activities increased during the six months ended June 30, 2024, when compared to the same period in 2023, primarily due to an increase in net contributions from member, as a result of the Reorganization, as discussed in Company Reorganization under Note 1.

Nature of Operations and Summary of Significant Accounting Policies within SBG's Consolidated Financial Statements, in the current period and the repurchase of outstanding Old Sinclair Common Stock, dividends paid on Old Sinclair Class A and Class B Common Stock, and the repurchase of the redeemable subsidiary preferred equity in the prior period.

Net cash flows used in SBG's financing activities decreased for the three months ended September 30, 2024, when compared to the same period in 2023, primarily due to a decrease in the repayment of debt in the current period.

Net cash flows used in SBG's financing activities decreased for the nine months ended September 30, 2024, when compared to the same period in 2023, primarily due to a decrease in the repayment of debt in the current period and an increase in net contributions from member in the current period, as a result of the Reorganization, as discussed in Company Reorganization under Note 1.

Nature of Operations and Summary of Significant Accounting Policies within SBG's Consolidated Financial Statements, and the repurchase of outstanding Old Sinclair Common Stock, dividends paid on Old Sinclair Class A and Class B Common Stock, and the repurchase of the redeemable subsidiary preferred equity in the prior period.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis