Sinclair Earnings: Broad Revenue Improvements Build Momentum as Election Heats Up

No-moat Sinclair showed improvement in the second quarter as media revenue met and adjusted EBITDA exceeded management’s guidance. While Sinclair benefited from $40 million in political advertising revenue during the quarter, the firm has also seen other headwinds abate. Accelerated retransmission revenue growth (4%) was driven by favorable distribution agreements the firm has signed over the past six months. Additionally, the rate of decline in core advertising improved, to negative 1% from negative 3% last quarter, as advertisers have slowly increased ad budgets. While economic concerns have emerged recently, management is cautiously optimistic in its outlook for the second half and raised full-year expectations. Though this outlook is positive, we had expected these improvements, given a competitive election cycle. We are maintaining our $12 fair value estimate.