Sinclair, Inc. 10-Q

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following Management’s Discussion and Analysis provides qualitative and quantitative information about Sinclair’s and SBG’s financial performance and condition and should be read in conjunction with Sinclair’s and SBG’s consolidated financial statements and the accompanying notes to those statements. This discussion consists of the following sections: Summary of Significant Events — financial events during the three months ended March 31, 2025 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 months ended March 31, 2025 and 2024. 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 months ended March 31, 2025. SUMMARY OF SIGNIFICANT EVENTS Content and Distribution • In January 2025, SBG and NBC announced a comprehensive multi-year agreement that renews station affiliation agreements for 21 of SBG’s owned and/or operated NBC affiliates and affiliations in five markets where SBG provides sales and other services under a joint sales agreement or marketing service agreement. • In the first quarter 2025, Sinclair reached a distribution agreement with YouTube TV to continue carriage of Tennis Channel, TennisChannel 2, CHARGE!, Comet, and ROAR. The agreement also added carriage of The Nest and PickleBall TV. • In April 2025, SBG launched BFFR, a weekly podcast from AMP Media hosted by women’s soccer icons Sydney Leroux and Ali Riley, across all major podcast platforms. • In April 2025, Sinclair announced that the Federal Aviation Administration (“FAA”) accepted Sinclair’s Declaration of Compliance for Operations Over People, making Sinclair the first broadcast company authorized to fly drones over individuals and moving vehicles without needing an FAA waiver for news gathering under FAA rules. Corporate Social Responsibility Practices • To date in 2025, SBG’s newsrooms have won a total of 33 journalism awards, including four national headliner awards. • In January 2025, Sinclair and Tennis Channel announced Sinclair Cares: California Wildfires Relief, a fundraising partnership with the Salvation Army to provide disaster relief support across Southern California which helped provide critical aid, shelter, food, fresh water, and support for wildfire survivors and first responders in Los Angeles. • In March 2025, Sinclair announced a partnership with the Salvation Army to launch Sinclair Cares: From Homeless to Hope, a nationwide initiative, including content produced by SBG and airing on SBG’s newscasts, dedicated to raising awareness about homelessness by shedding light on the many faces of homelessness and highlighting solutions that offer hope and stability. • In April 2025, Sinclair held its third 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 3,600 hours that day. NextGen Broadcast (ATSC 3.0) • In January 2025, Sinclair joined with three broadcast peers and merged BitPath to form a new company, EdgeBeam Wireless, to provide robust wireless data services to a wide range of businesses and industries across the country. 52 Table of Contents Financing, Capital Allocation, and Shareholder Returns • In February 2025, Sinclair declared a quarterly dividend of $0.25 per share and in May 2025, Sinclair declared a quarterly dividend of $0.25 per share. • In the first quarter 2025, Sinclair closed a new money financing and debt recapitalization to strengthen Sinclair’s balance sheet and better position it for long-term growth, which transactions are described more fully under Note 3. Notes Payable, Finance Leases, and Commercial Bank Financing within Sinclair’s Consolidated Financial Statements and Note 3. Notes Payable, Finance Leases, and Commercial Bank Financing within SBG’s Consolidated Financial Statements . • In April 2025, STG repurchased $66 million aggregate principal amount of the 5.125% Senior Notes due 2027 for consideration of $62 million. The 5.125% Senior Notes due 2027 acquired in April 2025 were canceled immediately following their acquisition. Other Events • In March 2025, Sinclair announced that Lucy Rutishauser, current Executive Vice President and Chief Financial Officer, will retire upon appointment and transition of her successor into the role. Following her retirement, Ms. Rutishauser is expected to serve as a senior advisor to the Company. 53 Table of Contents SINCLAIR, INC. RESULTS OF OPERATIONS SINCLAIR, INC. RESULTS OF OPERATIONS Any references to the second, third, or fourth quarters are to the three months ended June 30, September 30, or December 31, respectively, for the year being discussed. As of March 31, 2025, we had two reportable segments for accounting purposes, local media and tennis. Seasonality / Cyclicality The operating results of our local media segment are usually subject to cyclical fluctuations from political advertising. In even numbered years, political spending is usually significantly higher than in odd numbered years due to advertising expenditures preceding local and national elections. Additionally, every four years, political spending is usually elevated further due to advertising expenditures preceding the presidential election. Also, the second and fourth quarter operating results are usually higher than the first and third quarters’ because advertising expenditures are increased in anticipation of certain seasonal and holiday spending by consumers. The operating results of our tennis segment are usually subject to cyclical fluctuations due to the number and significance of tournaments that take place in the respective quarters during the year. The first and fourth quarter operating results are usually higher than the second and third quarters’ because of the number and significance of tournaments that are played during those periods. Operating Data The following table sets forth our consolidated operating data for the periods presented (in millions): Three Months Ended March 31, 2025 2024 Media revenues $ 770 $ 792 Non-media revenues 6 6 Total revenues 776 798 Media programming and production expenses 418 408 Media selling, general and administrative expenses 192 196 Depreciation and amortization expenses 62 63 Amortization of program costs 19 19 Non-media expenses 11 12 Corporate general and administrative expenses 52 58 Loss on asset dispositions and other, net 8 — Operating income $ 14 $ 42 Net (loss) income attributable to Sinclair $ (156) $ 23 54 Table of Contents SINCLAIR, INC. RESULTS OF OPERATIONS Local Media Segment The following table sets forth our revenue and expenses for our local media segment for the periods presented (in millions): Three Months Ended March 31, Percent Change Increase / (Decrease) 2025 2024 Revenue: Distribution revenue $ 395 $ 384 3% Core advertising revenue 271 284 (5)% Political advertising revenue 6 24 (75)% Other media revenues 22 35 (37)% Media revenues (a) $ 694 $ 727 (5)% Operating Expenses: Media programming and production expenses $ 390 $ 383 2% Media selling, general and administrative expenses (b) 170 183 (7)% Depreciation and amortization expenses 56 58 (3)% Amortization of program costs 19 19 —% Corporate general and administrative expenses 37 41 (10)% Non-media expenses 2 2 —% Loss on asset dispositions and other, net 8 — n/m Operating income $ 12 $ 41 (71)% Interest expense including amortization of debt discount and deferred financing costs $ 144 $ 76 89% Gain on extinguishment of debt $ 2 $ 1 n/m Other income, net $ 3 $ 31 (90)% n/m - not meaningful (a) Includes $3 million and $2 million for the three months ended March 31, 2025 and 2024, respectively, of intercompany revenue related to certain services provided to the tennis segment, which is eliminated in consolidation. (b) Includes $4 million and $2 million for the three months ended March 31, 2025 and 2024, respectively, of intercompany expense related to certain services provided by other, which is eliminated in consolidation. Revenue Distribution revenue. Distribution revenue, which represents fees earned from Distributors for our broadcast signals, increased $11 million or 3% for the three months ended March 31, 2025, when compared to the same period in 2024. Contractual rate increases favorably impacted period-over-period distribution revenue by high-teen percentages for the three months ended March 31, 2025. The increase in distribution revenue as a result of increased contractual rates was offset by a decrease in Big-4 subscribers by low-teen percentages for the period. Core advertising revenue. Core advertising revenue decreased $13 million for the three months ended March 31, 2025, when compared to the same period in 2024, with no particular product/services category dominating the variance. Political advertising revenue. Political advertising revenue decreased $18 million for the three months ended March 31, 2025, when compared to the same period in 2024, primarily due to 2025 being an off-year election cycle, and therefore having only a small number of political races and correspondingly less political advertising spending, compared to 2024 which was a presidential political year. Other media revenues. Other media revenues decreased $13 million for the three months ended March 31, 2025, when compared to the same period in 2024, primarily due to a decrease related to certain services under management services agreements. 55 Table of Contents SINCLAIR, INC. RESULTS OF OPERATIONS 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 March 31, 2025 2024 Syndicated/Other programming 39% 38% Local news 27% 29% Network programming (a) 15% 16% Sports programming (a) 16% 14% Paid programming 3% 3% (a) Sports programming includes both local and network sports programming. Network programming is exclusive of any network sports programming. The following table sets forth our affiliate percentages of advertising revenue for the periods presented: Percent of Advertising Revenue for the Three Months Ended March 31, # of Channels 2025 2024 ABC 40 27% 28% FOX 55 26% 22% CBS 30 19% 23% NBC 24 12% 12% CW 46 5% 5% MNT 39 3% 4% Other 406 8% 6% Total 640 Expenses Media programming and production expenses. Media programming and production expenses increased $7 million for the three months ended March 31, 2025, when compared to the same period in 2024, primarily due to an increase in fees pursuant to network affiliation agreements and other programming contracts as a result of increased contractual rates. Media selling, general and administrative expenses. Media selling, general and administrative expenses decreased $13 million for the three months ended March 31, 2025, when compared to the same period in 2024, primarily due to a $7 million decrease in trade related expenses, a $3 million decrease in employee compensation cost, and a $1 million decrease in national sale commissions. Corporate general and administrative expenses. See explanation under Corporate and Unallocated Expenses. Interest expense including amortization of debt discount and deferred financing costs. Interest expense increased $68 million for the three months ended March 31, 2025, when compared to the same period in 2024, primarily due to a series of financing transactions completed during the first quarter of 2025, as described in Credit Agreement and Notes under Note 3. Notes Payable, Finance Leases, and Commercial Bank Financing within Sinclair’s Consolidated Financial Statements. Included in interest expense for the three months ended March 31, 2025 is $68 million of one-time financing costs that will not recur in future periods. Gain on extinguishment of debt. For the three months ended March 31, 2025 , we recognized a gain on extinguishment of the 4.125% Senior Secured Notes due 2030 and 5.125% Senior Notes due 2027 of $5 million and $3 million , respectively, and a loss on extinguishment of the Term Loan B-2 of $6 million. See Credit Agreement and Notes under Note 3. Notes Payable, Finance Leases, and Commercial Bank Financing within Sinclair’s Consolidated Financial Statements. Other income, net. For the three months ended March 31, 2024, we recognized a $26 million gain related to the sale of certain broadcast related investments and $4 million in interest income. 56 Table of Contents SINCLAIR, INC. RESULTS OF OPERATIONS Tennis Segment The following table sets forth our revenue and expenses for our tennis segment for the periods presented (in millions): Three Months Ended March 31, Percent Change Increase / (Decrease) 2025 2024 Revenue: Distribution revenue $ 56 $ 52 8% Core advertising revenue 11 10 10% Other media revenues 1 1 —% Media revenues $ 68 $ 63 8% Operating Expenses: Media programming and production expenses $ 27 $ 25 8% Media selling, general and administrative expenses (a) 18 12 50% Depreciation and amortization expenses 5 5 —% Corporate general and administrative expenses — 1 n/m Operating income $ 18 $ 20 (10)% n/m - not meaningful (a) Includes $3 million and $2 million for the three months ended March 31, 2025 and 2024, respectively, of intercompany expense related to certain services provided by the local media segment, which is eliminated in consolidation. Revenue Distribution revenue. Distribution revenue, which represents fees earned from Distributors for the right to distribute Tennis Channel, increased $4 million or 8% for the three months ended March 31, 2025, when compared to the same period in 2024. Distribution revenue increased primarily due to low single-digit percentage increases in contractual rates for the three months ended March 31, 2025 and a low single-digit percentage increase in direct-to-consumer (“DTC”) subscriptions, partially offset by a decrease in subscribers by low single-digit percentages for the period. Core advertising revenue. Core advertising revenue is primarily generated from sales of commercial time within Tennis Channel programming. Core advertising revenue increased $1 million for the three months ended March 31, 2025, when compared to the same period in 2024, primarily due to additions in the 2025 tournament calendar compared to the 2024 tournament calendar. Expenses Media programming and production expenses. Media programming and production expenses increased $2 million for the three months ended March 31, 2025, when compared to the same period in 2024, primarily due to an increase in tournament production costs and an increase in build-out costs associated with our DTC platform. Media selling, general and administrative expenses. Media selling, general and administrative expenses increased $6 million for the three months ended March 31, 2025, when compared to the same period in 2024, primarily due to an increase in costs associated with the launch of the DTC platform. Corporate general and administrative expenses. See explanation under Corporate and Unallocated Expenses. 57 Table of Contents SINCLAIR, INC. RESULTS OF OPERATIONS Other 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 March 31, Percent Change Increase / (Decrease) 2025 2024 Revenue: Media revenues (a) $ 15 $ 6 n/m Non-media revenues (b) $ 6 $ 9 (33)% Operating Expenses: Media expenses $ 12 $ 5 n/m Non-media expenses (c) $ 9 $ 12 (25)% Operating loss $ (1) $ (3) (67)% ( Loss) income from equity method investments $ (5) $ 15 n/m Other (expense) income, net $ (69) $ 6 n/m n/m - not meaningful (a) Media revenues for the three months ended March 31, 2025 and 2024 include $4 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. (b) Non-media revenues for the three months ended March 31, 2024 include $3 million of intercompany revenue related to certain services and sales provided to the local media segment, which is eliminated in consolidation. (c) Non-media expenses for the three months ended March 31, 2024 include $2 million of intercompany expense related to certain services and sales provided by the local media segment, which is eliminated in consolidation. Revenue. Media revenues increased $9 million for the three months ended March 31, 2025, when compared to the same period in 2024, primarily due to an increase in advertising revenue related to the acquisition of CPX Interactive, as discussed in Business Combinations and Station Disposals under Note 1. Nature of Operations and Summary of Significant Accounting Policies within Sinclair’s Consolidated Financial Statements and our digital initiatives. Non-media revenues decreased $3 million for the three months ended March 31, 2025, when compared to the same period in 2024, primarily due to a decrease in broadcast equipment sales. Expenses. Media expenses increased $7 million for the three months ended March 31, 2025, when compared to the same period in 2024, primarily due to an increase in selling, general and administrative expenses related to the acquisition of CPX Interactive, as discussed in Business Combinations and Station Disposals under Note 1. Nature of Operations and Summary of Significant Accounting Policies within Sinclair’s Consolidated Financial Statements. Non-media expenses decreased $3 million for the three months ended March 31, 2025, when compared to the same period in 2024, primarily due to a decrease in expenses associated with lower broadcast equipment sales and a decrease in expenses related to our technical services business. (Loss) income from equity method investments. During the three months ended March 31, 2024, we recognized a gain of $17 million on the sale of two of our investments, which is included in (loss) income from equity method investments in our consolidated statements of operations. Other (expense) income, net . During the three months ended March 31, 2025 and 2024, we recognized a fair value adjustment loss of $73 million and a fair value adjustment gain of $2 million, respectively, associated with investments measured at fair value and NAV. 58 Table of Contents SINCLAIR, INC. RESULTS OF OPERATIONS Corporate and Unallocated Expenses The following table presents our corporate and unallocated expenses for the periods presented (in millions): Three Months Ended March 31, Percent Change Increase/ (Decrease) 2025 2024 Corporate general and administrative expenses $ 52 $ 58 (10)% Income tax benefit $ 46 $ 4 n/m n/m - not meaningful Corporate general and administrative expenses. The table above and the explanation that follows cover total consolidated corporate general and administrative expenses. Corporate general and administrative expenses decreased $6 million for the three months ended March 31, 2025, when compared to the same period in 2024, primarily due to a decrease in employee compensation cost. Income tax benefit. The effective tax rate for the three months ended March 31, 2025 was a benefit of 23.0% as compared to a benefit of 18.3% during the same period in 2024. The increase in the effective tax rate for the three months ended March 31, 2025, when compared to the same period in 2024, is primarily due to an immaterial $7.5 million correcting adjustment related to the accrual of interest income attributable to prior years’ pending income tax refund claims in 2024. 59 Table of Contents SINCLAIR BROADCAST GROUP, LLC RESULTS OF OPERATIONS SINCLAIR BROADCAST GROUP, LLC RESULTS OF OPERATIONS Any references to the second, third, or fourth quarters are to the three months ended June 30, September 30, or December 31, respectively, for the year being discussed. As of March 31, 2025, SBG had one reportable segment for accounting purposes, local media. Seasonality / Cyclicality The operating results of SBG’s local media segment are usually subject to cyclical fluctuations from political advertising. In even numbered years, political spending is usually significantly higher than in odd numbered years due to advertising expenditures preceding local and national elections. Additionally, every four years, political spending is usually elevated further due to advertising expenditures preceding the presidential election. Also, the second and fourth quarter operating results are usually higher than the first and third quarters’ because advertising expenditures are increased in anticipation of certain seasonal and holiday spending by consumers. Operating Data The following table sets forth SBG’s consolidated operating data for the periods presented (in millions): Three Months Ended March 31, 2025 2024 Total media revenues $ 694 $ 727 Media programming and production expenses 390 383 Media selling, general and administrative expenses 170 183 Depreciation and amortization expenses 56 58 Amortization of program costs 19 19 Non-media expenses 2 2 Corporate general and administrative expenses 37 41 Loss on asset dispositions and other, net 8 — Operating income $ 12 $ 41 Net (loss) income attributable to SBG $ (102) $ 5 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 the three months ended March 31, 2025 and 2024. As of March 31, 2025, the unrestricted subsidiaries (as defined in the New Credit Agreement, “Unrestricted Subsidiaries”) represented 0% of SBG’s total assets. For the three months ended March 31, 2025, the Unrestricted Subsidiaries represented 0% of SBG’s total revenues and decreased SBG’s total operating income by 18%. As of March 31, 2025 and for the three months ended March 31, 2025 there were no restricted subsidiaries that were non-guarantors (as defined in the New Credit Agreement) of SBG. 60 Table of Contents 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 March 31, Percent Change Increase/ (Decrease) 2025 2024 Corporate general and administrative expenses $ 37 $ 41 (10)% Income tax benefit $ 26 $ 9 n/m n/m - not meaningful Corporate general and administrative expenses. The table above and the explanation that follows cover total consolidated corporate general and administrative expenses. Corporate general and administrative expenses decreased by $4 million for the three months ended March 31, 2025, when compared to the same period in 2024, primarily due to a decrease in employee compensation cost. Income tax benefit. The effective tax rate for the three months ended March 31, 2025 was a benefit of 20.1% as compared to a benefit of 383.5% during the same period in 2024. The decrease in the effective tax rate for the three months ended March 31, 2025, when compared to the same period in 2024, is primarily due to an immaterial $7.5 million correcting adjustment related to the accrual of interest income attributable to prior years’ pending income tax refund claims in 2024. 61 Table of Contents LIQUIDITY AND CAPITAL RESOURCES Liquidity and Capital Resources As of March 31, 2025, Sinclair had net working capital of approximately $780 million, including $631 million in cash and cash equivalent balances, and $650 million of available borrowing capacity, including $575 million under the New Credit Agreement and $75 million under the Amended Credit Agreement. Cash on hand, cash generated by Sinclair’s operations, and borrowing capacity under the New Credit Agreement and the Amended Credit Agreement are used as Sinclair’s primary sources of liquidity. As of March 31, 2025, SBG had net working capital of approximately $387 million, including $277 million in cash and cash equivalent balances, and $650 million of available borrowing capacity, including $575 million under the New Credit Agreement and $75 million under the Amended Credit Agreement. Cash on hand, cash generated by SBG’s operations, and borrowing capacity under the New Credit Agreement and the Amended Credit Agreement are used as SBG’s primary sources of liquidity. The First-Out Revolving Credit Facility includes a financial maintenance covenant, the first-out first lien leverage ratio (as defined in the New Credit Agreement), which requires such ratio not to exceed 3.5x, 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 First-Out Revolving Credit Facility, measured as of the last day of each fiscal quarter, is utilized as of such date. Since there was no utilization under the First-Out Revolving Credit Facility as of March 31, 2025, STG was not subject to the financial maintenance covenant under the New Credit Agreement. As of March 31, 2025, the STG first-out first lien leverage ratio was below 3.5x. The New Credit Agreement contains other restrictions and covenants with which STG was in compliance as of March 31, 2025. During the three months ended March 31, 2025, STG completed a series of financing transactions (the “Transactions”), including a new money financing and debt recapitalization, which strengthened the Company’s balance sheet and better positioned it for long-term growth. STG’s nearest term maturity, Term Loan B-2 due 2026, was repaid with proceeds from the issuance of a new first-out first lien secured bond, along with the extension of maturities of other debt tranches, which significantly extended STG’s maturity profile. See Note 3. Notes Payable, Finance Leases, and Commercial Bank Financing within Sinclair’s Consolidated Financial Statements and Note 3. Notes Payable, Finance Leases, and Commercial Bank Financing within SBG’s Consolidated Financial Statements , for further information. In April 2025, STG repurchased $66 million aggregate principal amount of the 5.125% Senior Notes due 2027 for consideration of $62 million. The 5.125% Senior Notes due 2027 acquired in April 2025 were canceled immediately following their acquisition. During the three months ended March 31, 2025, there were no material changes to Sinclair’s or SBG’s contractual cash obligations as of March 31, 2025. Sinclair and SBG anticipate that existing cash and cash equivalents, cash flow from the local media segment’s operations, and borrowing capacity under the New Credit Agreement and the Amended 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. Sinclair anticipates that existing cash and cash equivalents and cash flow from SBG, the tennis segment, and other’s operations will be sufficient to satisfy SBG, the tennis segment, and other’s debt service obligations, capital expenditure requirements, and working capital needs for the next twelve months. However, certain factors, including but not limited to the war in Ukraine, conflict in the Middle East, other geopolitical matters, natural disasters, pandemics, and potential tariffs and trade restrictions and their resulting effect on the economy, Sinclair’s and SBG’s advertisers, and Sinclair’s and SBG’s Distributors and their subscribers, could affect Sinclair’s and SBG’s liquidity and first lien leverage ratio which could affect Sinclair’s and SBG’s ability to access the full borrowing capacity under the New Credit Agreement. In addition to the sources described above, Sinclair and SBG may rely upon various sources for long-term liquidity needs, such as but not limited to, the issuance of long-term debt (including, for example, an accounts receivable securitization facility), the issuance of Sinclair equity, for Sinclair only, the issuance of Ventures equity or debt, or other instruments convertible into or exchangeable for Sinclair equity, or the sale of assets. However, there can be no assurance that additional financing or capital or buyers of assets will be available, or that the terms of any transactions will be acceptable or advantageous to Sinclair or SBG. 62 Table of Contents LIQUIDITY AND CAPITAL RESOURCES Sinclair, Inc. Sources and Uses of Cash The following table sets forth Sinclair’s cash flows for the periods presented (in millions): Three Months Ended March 31, 2025 2024 Net cash flows from (used in) operating activities $ 5 $ (4) Cash flows (used in) from investing activities: Acquisition of property and equipment $ (16) $ (21) Acquisition of businesses, net of cash acquired (25) — Purchases of investments (8) (3) Distributions and proceeds from investments 7 77 Other, net — 1 Net cash flows (used in) from investing activities $ (42) $ 54 Cash flows used in financing activities: Proceeds from notes payable and commercial bank financing $ 1,430 $ — Repayments of notes payable, commercial bank financing, and finance leases (1,331) (34) Dividends paid on Class A and Class B Common Stock (17) (16) Debt issuance costs (99) — Distributions to noncontrolling interests, net (3) (2) Other, net (9) (5) Net cash flows used in financing activities $ (29) $ (57) Operating Activities Net cash flows from Sinclair’s operating activities increased for the three months ended March 31, 2025, when compared to the same period in 2024, primarily due to an increase in cash collections from Distributors and a decrease in overhead costs, partially offset by a decrease in cash collections related to political revenue and an increase in production costs. Investing Activities Net cash flows used in Sinclair’s investing activities increased for the three months ended March 31, 2025, when compared to the same period in 2024, primarily due to a decrease in the distributions and proceeds from investments and the acquisition of CPX Interactive in the current quarter. Financing Activities Net cash flows used in Sinclair’s financing activities decreased for the three months ended March 31, 2025, when compared to the same period in 2024, primarily due to the Transactions. See Note 3. Notes Payable, Finance Leases, and Commercial Bank Financing within Sinclair’s Consolidated Financial Statements for further information. Sinclair declared a quarterly dividend of $0.25 per share in February 2025 and $0.25 per share in May 2025. 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. 63 Table of Contents LIQUIDITY AND CAPITAL RESOURCES Sinclair Broadcast Group, LLC Sources and Uses of Cash The following table sets forth SBG’s cash flows for the periods presented (in millions): Three Months Ended March 31, 2025 2024 Net cash flows from operating activities $ 34 $ 17 Cash flows (used in) from investing activities: Acquisition of property and equipment $ (15) $ (22) Distributions and proceeds from investments — 26 Other, net — 1 Net cash flows (used in) from investing activities $ (15) $ 5 Cash flows used in financing activities: Proceeds from notes payable and commercial bank financing $ 1,430 $ — Repayments of notes payable, commercial bank financing, and finance leases (1,331) (34) Debt issuance costs (99) — Distributions to noncontrolling interests, net (2) (2) (Distributions to) contributions from member, net (31) 32 Net cash flows used in financing activities $ (33) $ (4) Operating Activities Net cash flows from SBG’s operating activities increased for the three months ended March 31, 2025, when compared to the same period in 2024, primarily due an increase in cash collections from Distributors and a decrease in overhead costs, partially offset by a decrease in cash collections related to political revenue and an increase in production costs. Investing Activities Net cash flows used in SBG’s investing activities increased for the three months ended March 31, 2025, when compared to the same period in 2024, primarily due to a decrease in distributions and proceeds from the sale of broadcast investments, partially offset by a decrease in the acquisition of property and equipment in the current period. Financing Activities Net cash flows used in SBG’s financing activities increased for the three months ended March 31, 2025, when compared to the same period in 2024, primarily due the Transactions and an increase in distributions to member. See Note 3. Notes Payable, Finance Leases, and Commercial Bank Financing within SBG’s Consolidated Financial Statements for further information related to the Transactions. CRITICAL ACCOUNTING POLICIES AND ESTIMATES There were no changes to the critical accounting policies and estimates from those disclosed in Critical Accounting Policies and Estimates under Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations within our Annual Report on Form 10-K for the year ended December 31, 2024. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK There have been no material changes from the quantitative and qualitative discussion about market risk previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024. 64 Table of Contents