Sinclair - Earnings Call - Q1 2025

Executive Summary

• Q1 2025 revenue was $0.776B, essentially in line with S&P Global consensus ($0.776B*) while Primary EPS missed (actual -$1.25 vs -$0.91*). GAAP diluted EPS was -$2.30, and Adjusted EBITDA of $112M beat the high end of guidance on lower media expenses. Values with asterisk retrieved from S&P Global.*
• Distribution revenue rose $15M YoY to $451M but landed ~$2M below internal guidance as churn moderation lagged; core advertising declined 2% YoY to $292M yet management again cited industry‑leading core trends.
• Balance sheet was de‑risked via a comprehensive refinancing (nearest meaningful maturity Dec 2029) and $66M of 2027 notes repurchased in April for $62M; cash totaled $631M. FY25 cash tax outlook was cut to $117–$124M (midpoint $121M) from $211–$220M previously, a key cash flow positive.
• Q2 2025 guidance: total revenues $787–$807M; Adjusted EBITDA $91–$107M; company expects Local Media core ~-2% YoY and distribution ~+1% YoY.
• Potential stock catalysts: deregulatory actions (ownership rules, reverse comp framework), NextGen/EdgeBeam commercialization, Tennis Channel growth under new CEO, and Ventures cash deployment.

What Went Well and What Went Wrong

• What Went Well

  • Adjusted EBITDA beat: “Adjusted EBITDA exceeded the high-end of our guidance range,” supported by better‑than‑expected media expenses.
  • Distribution resilience and core relative outperformance: Net retrans grew mid‑single digits YoY; management reiterated a 2023–2025 mid‑single‑digit CAGR, and highlighted industry‑leading core advertising trends.
  • Strategic momentum: Completed comprehensive refinancing (weighted average maturity >6 years) and repurchased $66M notes at a discount; added high‑profile leadership for Tennis Channel (Jeff Blackburn) and kicked off a new ATP/WTA sponsorship unit with Verizon as first sponsor.

• What Went Wrong

  • EPS miss: Primary EPS came in below S&P Global consensus (actual -$1.25 vs -$0.91*), while GAAP diluted EPS was -$2.30 on refinancing‑related items and other below‑the‑line pressures. Values with asterisk retrieved from S&P Global.*
  • Distribution came in light vs internal guide: churn moderation improved but lagged the plan, yielding ~$2M shortfall vs guidance.
  • Macro/tariff uncertainty curtailed visibility: management pulled a full‑year media expense line and cited reduced advertiser visibility (4–6 week look‑ahead), with certain categories (e.g., autos) mixed and leaning to leases.

Transcript

Operator (participant)

Good day, everyone, and welcome to the Sinclair First Quarter 2025 Earnings Conference Call. At this time, all participants have been placed on a listen-only mode, and we will open the floor for your questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Chris King, Vice President of Investor Relations at Sinclair Inc. Sir, the floor is yours.

Chris King (VP of Investor Relations)

Thank you. Good afternoon, everyone, and thank you for joining Sinclair's First Quarter 2025 Earnings Conference Call. Joining me on the call today are Chris Ripley, our President and CEO, Lucy Rutishauser, our Executive Vice President and Chief Financial Officer, and Rob Weisbord, our COO and President of Local Media. Before we begin, I want to remind everyone that slides for today's earnings call are available on our website, sbgi.net, on the Events and Presentations page of the Investor Relations portion of the site. A webcast replay will remain available on our website until our next quarterly earnings release. Certain matters discussed on this call may include forward-looking statements regarding, among other things, future operating results. Such statements are subject to a number of risks and uncertainties. Actual results in the future could differ from those described in the forward-looking statements as a result of various important factors.

Such factors have been set forth in the company's most recent reports as filed with the SEC and included in our first quarter earnings release. The company undertakes no obligation to update these forward-looking statements. Included on the call will be discussion of non-GAAP financial measures, specifically adjusted EBITDA. These measures are not formulated in accordance with GAAP, are not meant to replace GAAP measurements, and may differ from other companies' uses or formulations. Further discussions and reconciliations of the company's non-GAAP financial measures to comparable GAAP financial measures can be found on our website. Let me now turn the call over to Chris Ripley.

Chris Ripley (President and CEO)

Good afternoon, everyone, and thank you for joining us. Beginning on slide three, we're off to a solid start to the year despite the macroeconomic uncertainty all around us. Our total media revenue was in line with our expectations. Once again, we reported what we believe will be among the strongest core advertising performances among our broadcast peers in the first quarter. Total advertising revenues were within our guidance range, excluding the impact in the quarter from an acquisition by Compulse. Distribution revenues increased by $15 million year-over-year, and while subscriber churn moderated slightly, the improvements have not yet caught up with our guide, which led to distribution revenues coming in $2 million below our guidance. Media expenses were better than expected, driving adjusted EBITDA comfortably above the high end of our guidance range.

Turning to slide four, our ventures portfolio continues to transform away from our minority investment holdings as we look to position the portfolio for more majority-owned assets over time. Ventures benefited from $10 million of cash distributions and invested $38 million in the quarter, including approximately $30 million for an acquisition by Compulse. Ventures cash balance was $354 million at quarter end. After completing our comprehensive refinancing of SEG in February, we continue to carefully examine potential uses of ventures cash, which may include potential share repurchases or other shareholder-friendly activity. On slide five, I wanted to highlight a key announcement we made last week regarding the hire of Jeff Blackburn as Chairman and CEO of Tennis Channel.

Jeff comes to us after a storied 20-plus year career at Amazon, where he was the prime architect of the company's expansion into streaming and sports, while also developing and building Prime Video, Prime Studios, Amazon Music, Amazon's advertising and marketplace divisions. He will lead Tennis Channel's strategy to expand its digital and streaming footprint and deepen audience engagement in order to position Tennis Channel for its next phase of transformative growth and long-term value creation. As the latest example of such growth, just this morning, we announced the formation of a new business unit to operate a groundbreaking partnership with the ATP, WTA, and participating U.S. tournaments to create a unified opportunity to purchase a single comprehensive sponsorship package that covers the entire country. This morning, Verizon was announced as the 1st sponsor sale with category exclusivity in the 5G wireless space.

We are excited to have attracted a media executive of Jeff's stature, and we view the Tennis Enterprise sponsorship announcement as an example of the growth and long-term value creation that we're committed to delivering in the quarters and years to come. With that said, let me now turn it over to Rob to continue the discussion about our broadcast business.

Rob Weisbord (COO and President of Local Media)

Thanks, Chris, and good afternoon, everyone. Turning to slide six, as Chris mentioned earlier, we expect our core advertising results to once again be a leader in the industry, despite the uncertainty and volatility that is impacting major categories across the nation. This would continue recent trends, which have seen us beating our publicly traded broadcasting peers in year-over-year core growth rates for the past six quarters through the end of 2024. During the first quarter, core advertising revenues were within our guidance range of down low single digits year-over-year. Having said that, the macroeconomic and tariff-related uncertainty is creating hesitation by certain top categories. On a positive note, we are now less than eight months away from another political season kicking off. On slide seven, as an early preview on what we expect in 2026, we currently have 23 Senate races and 25 gubernatorial races in our footprint.

We believe that at least six of these Senate races will be highly competitive, and more than half the gubernatorial races will have competitive primaries. In addition, more than 30 House races have already been targeted by the national Republican and Democratic parties as potential flips. We expect intense battles across the country as the House, Senate, and gubernatorial elections are all close to being evenly split between the two parties. We expect taking control will be a driver of midterm election dollars. Touching our distribution revenues on slide eight, our net retransmission revenues grew by mid-single digits year-over-year in the quarter, and we continue to expect a two-year mid-single digit CAGR through the end of this year. Notably, Charter, our largest MVPD, reduced video subscriber discounts in the first quarter by 55% year-over-year, highlighting their success in reducing churn, including what we have called the great rebundling.

The package is streaming platforms with legacy linear packages. We believe Charter's success in reducing churn illustrates how creative solutions, including this type of bundling of the streaming platforms with legacy linear packages, can reduce or reverse subscriber churn materially over time. From a renewal perspective, during the quarter, we extended our YouTube TV distribution agreement. As a reminder, we do not have any outstanding traditional linear distribution or Big Four network affiliation agreements up for renewal before late 2026. I also want to point out that our Portland Trail Blazers coverage in this past NBA regular season doubled its average audience size on our stations in the Pacific Northwest versus the prior season's coverage on a regional sports network, once again highlighting the importance of live sports and the benefits of the wide distribution of broadcast TV.

The latest addition to our AMP Media Sports podcast lineup, the FFR, starring women's soccer stars Sydney Rae Leroux and Ali Riley, two of the key members of Angel City Football Club, launched last week. The weekly podcast will focus on the authentic behind-the-scenes discussions that have helped them grow their social media identities into some of the largest in the women's sports media landscape. We will also launch a women's basketball podcast shortly featuring WNBA stars Candace Parker and Aliyah Boston. These launches reflect our continued commitment to elevating women's sports and amplifying the voice of its top athletes. Stay tuned for additional announcements regarding the ongoing expansion of our social media and podcast platforms.

I also wanted to briefly mention our very successful upfront presentation last week in New York, where we showcased our news and sports brands and demonstrated how advertisers can activate and amplify their brands as our partner. I wanted to thank all our podcast talent, including Coach Urban Meyer, Mark Ingram II, Rob Stone, Martina Navratilova, Sydney Rae Leroux, Landon Donovan, Matt Leinart, and Jerry Ferrara for being at our upfront and helping us demonstrate what a powerful partner we can be for our advertisers. We look forward to sharing updates with you in coming quarters. Now, let me turn it back over to Chris to provide a couple of industry updates.

Chris Ripley (President and CEO)

Thanks, Rob. Turning to slide nine, we, along with the NAB and the entire industry, are hopeful that many of the woefully outdated FCC regulations that have hampered growth in the broadcast industry over the recent decades will be revisited, if not eliminated, in the coming months. We remain hopeful that most of the outdated ownership rules impacting the sector will be modified to allow sensible M&A and portfolio rationalization. In addition, the industry will be lobbying for other issues impacting the sector, particularly the rules that prohibit broadcasters from negotiating directly with virtual MVPDs, as well as the rules that will allow the industry to rapidly sunset ATSC 1.0 networks, which will help accelerate wide adoption of next-gen broadcast products and services.

As an example of what may come, last week, FCC Commissioner Simington and his chief of staff authored an op-ed suggesting that the FCC should take action to cap network programming fees at 30% of retransmission fees. The piece highlights this proposal as a way to protect local broadcasters and local journalism from big tech and big media. The implementation of such a proposal would allow for the strengthening of local broadcasters and local news throughout the country. We look forward to continuing to work with Chairman Carr and the rest of the FCC on the very welcomed and long-overdue deregulatory approach to the broadcast industry to help level the playing field. Lastly, I wanted to extend my deep appreciation and best wishes to Lucy, who announced her upcoming retirement several weeks ago.

While Lucy is staying on through the transition of the new CFO, her over 26 years at Sinclair will be coming to an end within the next several months. Lucy has more than eight years of experience in the CFO chair, and her reputation and expertise have benefited Sinclair greatly over the years. Lucy recently led our almost $4 billion comprehensive refinancing and has helped guide the company through tremendous growth of our portfolio of stations, diversification of our assets, many capital markets transactions, and many other initiatives, as well as the Great Recession, the pandemic, and other challenges. Her numerous awards and recognitions from across the industry are a testimony to her leadership, dedication, and knowledge of both Sinclair and the wider broadcast industry.

Even though we expect her to remain with us in a senior advisory role, there is no question that we will greatly miss her guidance, strategic and fiscal contributions, mentorship, and work ethic. On behalf of the company, thank you for everything, Lucy. Now, perhaps for the final time, let me turn it over to Lucy for a discussion on our financial results in more detail. Lucy?

Lucy Rutishauser (EVP and CFO)

Thank you, Chris, for the very kind words, and good afternoon, everyone. I'm pleased to say that I depart with Sinclair in a financially strong and healthy position and pleased to grow in what should be a transformative next few years with deregulation and next-gen broadcast. Turning to slide ten, following our recent refinancing, we have significantly extended the debt maturity profile of the company with a current weighted average maturity of more than six years. As of March 31st, our 1st-out, 1st-lien net leverage was 1.8 times, with total 1st-lien net leverage at 4.2 times and total net leverage at 5.8 times, as defined in our new STG credit agreement. Our balance sheet is now not only the industry's longest in terms of maturity profile, but more importantly, positions us well to participate in what we hope will be a period of renewed M&A activity within the sector.

In addition to the comprehensive refinancing, we also repurchased approximately $66 million in face value of STG's 2027 notes for $62 million in early April. On slide 11, we highlight our first quarter segment results. Despite the negative economic headlines and general levels of uncertainty throughout the economy, we delivered inline media revenues in our local media segment, with core advertising down 4.5% year-over-year, and distribution revenues that were slightly below expectations, although they grew year-over-year. Our political revenue outperformance in the quarter was largely driven by a Wisconsin Supreme Court race that garnered national attention in what could be an early indicator of what's to come in next year's midterm elections. Adjusted EBITDA beat the high end of our guidance range by approximately $9 million for local media, driven by favorable SG&A and promotional expenses on a continued cost savings focus.

Tennis Channel had another strong quarter with revenues and adjusted EBITDA both in line with our guidance ranges as total revenues grew by 9% from year-ago levels. Slide 12 reviews our consolidated media revenue, which was within our guidance range, as inline core and higher political advertising were offset by slightly lower-than-expected distribution revenues. Media revenues fell by approximately $22 million year-over-year, driven by lower political advertising revenues in this non-election year and the absence of material Diamond Sports management fees, which were offset by higher distribution revenue of $15 million year-over-year on the recent renewals. Turning to slide 13, our consolidated adjusted EBITDA exceeded our guidance range primarily on a continued focus on managing expenses, which were lower than forecast due to several SG&A line items.

As compared to last year, adjusted EBITDA declined by $27 million, driven by lower core political, and management fee revenues, and slightly higher media expenses on network programming fees, production costs, and annual compensation increases. On slide 14, we introduced our second quarter 2025 guidance. Please note that our guidance includes the recent acquisition by Compulse, which is included in other in our segment reporting. We expect second quarter media revenues to be lower year-over-year on a consolidated basis due primarily to significantly lower political revenues in a non-election year, the absence of material Diamond management fees, as well as some continued softness in core advertising categories.

We anticipate local media core advertising revenue to be lower by approximately 2% at the midpoint of our guidance range, while distribution revenues are expected to be 1% higher year-over-year as we begin to cycle through some of the larger distribution renewals from a year ago. Our consolidated adjusted EBITDA is expected to be within a range of $91 million-$107 million. Turning to slide 15, we present our full-year guidance. However, we have removed the media expense line item. We believe the current macroeconomic and tariff-related uncertainty is causing our advertisers in several key categories to have significantly reduced visibility, and is therefore driving a wide range of potential outcomes in the 2nd half of the year. In fact, several of those advertisers have pulled their own financial guidance.

With the reduced visibility on core revenues in the back half of the year, it's difficult to provide a range for the media expenses given the direct cost associated with those revenues, such as commissions, bonuses, etc. However, you do have Q1 actuals and Q2 guidance to inform your full-year media expense estimates based on your advertising revenue assumptions in the back half of the year. We will note that consistent with our beat on media expenses in the first quarter, we would expect those expense trends pre-acquisition to continue under an assumption of consistent revenue expectations for the remainder of the year. In the full-year guidance provided, net interest expense includes the non-recurring $68 million in fees and expenses related to the refinancing that were expensed in the first quarter.

Notably, for the year, we are now forecasting much lower cash tax payments of $121 million at the midpoint of our guidance, which is $95 million lower than our guidance provided last quarter. Driving the reduction is a revised estimate of the taxes on the Diamond exit gain, which declined from an estimated $170 million-$83 million. The $87 million estimated reduction is largely due to having more current information regarding the utilization of certain tax attributes. Of the $83 million Diamond exit gain taxes, local media is estimated to fund $58 million and ventures to fund $25 million. I will now turn it back to Chris for some closing remarks before we open the call to Q&A.

Chris Ripley (President and CEO)

Thanks, Lucy. Turning to slide 16 to wrap up the quarter with our key takeaways. Sinclair delivered solid financial results in a challenging environment. Adjusted EBITDA exceeded the high end of our range guidance. Core advertising trends continue to be among the best in the industry despite the macroeconomic uncertainties and lack of visibility. Subscriber churn continues to moderate. Regulatory optimism remains buoyant with expectations for loosened M&A restrictions and next-gen spectrum relief, among other potentially favorable changes that could lead to a strengthening of local journalism. The balance sheet is strong with a comprehensive refinancing completed during the first quarter, our weighted average maturity of more than six years out, our nearest meaningful maturity not until December of 2029, and $66 million of debt repurchased at a discount.

Finally, liquidity got a further boost from a significantly lower cash tax payment estimate for the full year related to the Diamond Chapter 11 emergence. In summary, we could not be more optimistic about the future for the industry and Sinclair's continued position as an industry leader. Thank you very much for joining us today and your interest in Sinclair. Rob, Lucy, and I will now take your questions.

Operator (participant)

Certainly. Everyone at this time will be conducting a question-and-answer session. If you have any questions or comments, please press star one on your phone at this time. We do ask that while posing your question, please pick up your handset if you're listening on speakerphone to provide optimum sound quality. Once again, if you have any questions or comments, please press star one on your phone. Your 1st question is coming from Dan Kurnos from Benchmark. Your line is live.

Dan Kurnos (Managing Director of Internet and Media Equity Research)

Great. Thanks. Good afternoon. Chris, let me just echo sentiments. Lucy, we go back a long, long way. A certain one-handed catch at Brewer's Stadium while holding a beverage, I might add, will never be forgotten. I do certainly wish you nothing but the best. I just wanted to start with that.

Lucy Rutishauser (EVP and CFO)

I appreciate that. Thank you, Dan.

Dan Kurnos (Managing Director of Internet and Media Equity Research)

Chris, obviously, the Simington Op-Ed piece has gotten a lot of attention. There is a lot of debate as to whether or not the FCC can cap retrans rates, reverse rates, I should be clear. Can you please address that and whether or not you think they can do something like that? Although, obviously, if they were even just to allow you to negotiate directly with the virtuals, that would change the net trajectory pretty significantly.

Chris Ripley (President and CEO)

Sure. The FCC does have the ability to regulate the relationship between networks and affiliates. That is a part of their charter. Obviously, capping a major expense like that could be very helpful in terms of leveling the playing field with us and big tech and big media. It could also open up bigger opportunities for us in terms of filling in day parts that maybe the networks do not want to service anymore, which would also dovetail with the FCC's objectives. Overall, I think what our key takeaway is from that Simington Op-Ed is that we are seeing this groundswell of deregulatory support for the broadcast industry that we believe is well overdue.

The right answer for the industry, I think, will end up being a combination of things, some of which will be loosening up ownership rules, sunsetting 1.0, but other ideas that are coming to the surface here. We are just thrilled that the FCC is stepping in to help level the playing field.

Dan Kurnos (Managing Director of Internet and Media Equity Research)

Got it. Super helpful. Kind of the other obvious question, given sort of the uncertainties out there, you pulled your media expense line item. We got the 2Q guide. Maybe just tell us what you're seeing out there, conversations with advertisers, and how do you guys feel about how core might shape up for the year, understanding you have some really easy comps in the back half of the year?

Rob Weisbord (COO and President of Local Media)

Yeah. As we look at as the year goes on, we still expect our core to grow year-over-year. However, I'll caveat that by saying that our visibility is greatly reduced over what it was six to eight weeks ago. We've seen large companies in several of our key advertising categories, such as Ford, pull their own financial guidance for the year, given the uncertainty around what the broader economic and tariff policies are. Those companies are concerned about what the supply chains as well as consumer confidence and demand. While we expect it to grow year-over-year, I couch it that we're cautiously optimistic with limited visibility as time has gone on.

Dan Kurnos (Managing Director of Internet and Media Equity Research)

Got it. Super helpful. Thank you. Lucy, best of luck.

Lucy Rutishauser (EVP and CFO)

Thank you, Dan.

Operator (participant)

Thank you. Your next question is coming from Aaron Watts from Deutsche Bank. Your line is live.

Aaron Watts (Managing Director of Media, Entertainment, and Cable and Satellite Fixed Income Analyst)

Hey, everyone. Thanks for having me on. Lucy, I want to thank you for everything over the many years, including putting up with all my questions and all our conferences you took time to participate in. We'll miss you at those and on these calls, but I am glad that you'll still be with the company in your new role. Best of luck with that.

Lucy Rutishauser (EVP and CFO)

Appreciate it. Thank you.

Aaron Watts (Managing Director of Media, Entertainment, and Cable and Satellite Fixed Income Analyst)

Of course. A follow-up on core advertising and maybe the auto category specifically. How did that trend in first quarter, and how is it looking in 2Q? Are you seeing any bump on kind of beat the tariff ads, get a car before the price increases? And do you see this bump, if it is happening, as sustainable at all?

Rob Weisbord (COO and President of Local Media)

Up to this date, we haven't seen that bump. We were just notified, though, that Nissan will be going on an aggressive ad campaign. What's interesting is the trends are moving away from outright buys to leases, and the leases are tending to trend up. We're bullish on the financial segment wrapped around the automotive. Again, they're going to have to clear out the 25s in the back half of the year to make room for the 26s. Again, with some of the visibility not there, how much of the foreign manufacturers, OEMs, how much is going to come into the country still remains not visible to us. I think we're competitive on the domestic side, and the foreign side is still to be seen.

Aaron Watts (Managing Director of Media, Entertainment, and Cable and Satellite Fixed Income Analyst)

Okay. In terms of what you see from some of your bigger markets versus maybe more of your smaller markets, national versus local, are you seeing a widespread kind of difference in advertiser sentiment based on that? I mean, we've been hearing that national is a bit weaker than local. Are you seeing that play out?

Rob Weisbord (COO and President of Local Media)

No, both are running parallel with each other. Again, I think we approach the business in a unique way. Our moniker is One Partners and Possibilities, and we just ran a draft with our audio talent from Green Bay. We activated a couple of our major advertisers. As we look at it, we do not really look at trying to do just straight ads in what is termed the spots and dots world. It really is cross-platform and the activation and amplifying of our partners, which we are seeing in our upfront. We have long-term partnerships that have been strong and stay with us because of that activation. We are not really seeing much difference between local and national as far as our pace, and it has to do just with how we both service the local clients and the national clients.

Aaron Watts (Managing Director of Media, Entertainment, and Cable and Satellite Fixed Income Analyst)

Okay. That's helpful. Thanks. Lucy, maybe I could aim one your way. You noted the $66 million of bond repurchases in April. Can you just remind us the capital allocation priorities for the television group specifically? Should we expect continued debt paydown going forward, in particular, as we roll into next year when the political dollars Chris highlighted start to roll in?

Lucy Rutishauser (EVP and CFO)

Yeah. As we've been saying for a couple of quarters now, Aaron, and especially with the refi, our focus is on deleveraging the local media group. This is one indication: buying the debt in at a discount where we can start to drive that deleveraging down.

Aaron Watts (Managing Director of Media, Entertainment, and Cable and Satellite Fixed Income Analyst)

Okay. Perfect. Thank you for the time. And, Lucy, best of luck.

Lucy Rutishauser (EVP and CFO)

Thank you.

Chris Ripley (President and CEO)

Thanks, Aaron.

Operator (participant)

Thank you. Your next question is coming from Steven Cahall from Wells Fargo. Your line is live.

Steven Cahall (Managing Director and Senior Analyst)

Thank you. Chris, I was wondering if you could talk a little more about the specifics of how you see deregulation unfolding. I think when the Republicans have a majority of commissioners, then maybe they'll move to notice of proposed rulemaking. I was wondering if you think that's the next step where the industry will begin to have substantive conversations. Whether you participate as a buyer or a seller, do you feel like that process needs to clear any court challenges that it could face before you'd be willing to sort of sign and be willing to transact? Just trying to get an understanding of how fast this can happen or if there's a number of steps in the process that we'll need to wait for before you'd be comfortable transacting if we do get pretty significant deregulation like we expect.

Chris Ripley (President and CEO)

Sure. Look, on that front, there's a number of current data points in terms of just the rules changing. One is that the confirmation of the 3rd Republican commissioner, Olivia Trusty, is moving forward well. I think our expectation is that she could be in place by Memorial Day. After that, I do expect that rulemaking will start to proceed. You saw Commissioner Carr making news today calling the in-market ownership rules outdated and antiquated. There's definitely this groundswell is there, and I expect that action will be taken once the 3rd Republican commissioner is put in place, and that's looking like it's going to move forward fairly quickly.

That said, in terms of M&A in the meantime, just the rules that we have on the books today, which include things like the UHF discount, which include ownership of two Big Fours, subject to a Big Four waiver. The rules as they exist today do actually afford most players, including Sinclair, a significant amount of flexibility for M&A. I think that, at least from our perspective, you're going to see more activity from us. You've already seen some, right? We announced a sale of five markets, a station swap. You're going to start seeing more in the weeks to come. We will start filing for some of the JSA buy-ins that I've been talking about before. That's a very accretive trade that should add tens of millions of dollars to our bottom line with very little cash out the door.

I think station swaps are going to happen in the meantime while we wait for some of these rules to change. Even large-scale M&A or mergers are on the to-do list, I think, for many broadcasters. I don't think many of the, depending on the situation, you don't necessarily have to wait for the rules to change.

Steven Cahall (Managing Director and Senior Analyst)

Got it. Thank you. Then just on advertising, should we assume with the change to the expense guide in the back half of the year that your visibility is also a little lower as you look out later in Q2? Obviously, April is fine. You have M&A, but maybe you can just speak to where the visibility starts to decline. Do you go forward in Q2, or is Q2 kind of as you would expect before we had all the volatility? Thank you.

Chris Ripley (President and CEO)

I'll let others chime in. In terms of our visibility, it's really about four to six weeks out. What data we have on Q3 and Q4 really does not really tell us much at this point. About 20% of our total expense load is variabilized to revenue, and that sort of gives you a window as to why talking about FERA guidance did not make sense at this time.

Rob Weisbord (COO and President of Local Media)

What I'll add is the visibility is four to six weeks. As we go into the middle of third quarter, fourth quarter, with the return of college football and NFL, we're coming off of record championship games, Super Bowls. Sports on broadcast have seen record highs, and the advertisers have noticed it. Even with the economic times, uncertainty is what we know is certain is that there is a demand for top eight-tier sports. We're set up perfectly in the third and fourth quarter to capitalize on the eight-tier sports that will be returning to the networks.

Steven Cahall (Managing Director and Senior Analyst)

Thank you.

Operator (participant)

Thank you. Your next question is coming from Benjamin Soff from Deutsche Bank. Your line is live.

Benjamin Soff (Director of Equity Research)

Good afternoon. Thanks for the question. I was curious if you could talk a little bit more about the Compulse deal, any additional color on that asset, and how it's impacting numbers. For Lucy, another really strong quarter on the expense side, can you talk about where you were able to capture those savings and how much runway is left to continue taking costs out of the business? Thank you.

Lucy Rutishauser (EVP and CFO)

Yes. Why don't I do that part 1st, and then Chris will talk about the acquisition. I appreciate the compliment on the expense side. This is an enterprise-wide focus where all of our department heads are engaged in looking for ways to work smarter, be more efficient, and really question the spending. I would like to take credit for it, but I really have to give credit to the entire organization on that. Really, in first quarter, that is coming across a multitude of departments. I wish I could just point to one of them as being the main driver, but it really is coming across on an enterprise-wide basis. What I would say is, are there more expenses that if we needed to, that we could take out of the business? Again, if we needed to, the answer is yes.

Right now, there is not a need to go down to the bare minimum. We continue to spend where we see growth in the business and be smarter about the places where it's not growing or we really don't need to put investment behind it.

Chris Ripley (President and CEO)

In terms of the acquisition, Compulse, as I've stated in prior earnings results, is matured to the point where it really is a best-in-class platform. It's delivering double-digit growth for us every quarter, year-over-year. It's got healthy margins, and we really are looking to scale it in a big way. This acquisition on a pro forma basis ends up being a very attractive multiple for us because of the synergies, and it significantly increases the amount of revenue that we're putting onto the Compulse platform. It's a very accretive move in an area that is consolidating, and this will increase the financial size and significance of Compulse for the ventures portfolio going forward.

Rob Weisbord (COO and President of Local Media)

I'll add that it follows our commitment to being a multimedia company, not a singular broadcast company. We recognize where viewer habits are shifting, and we will shift with those habits. We've made a commitment to our sellers, to our digital content folks, that we would support them. The demand showcases why we will support that growth for Compulse because it's justified by its growth and by where viewer habits are.

Benjamin Soff (Director of Equity Research)

Got it. Appreciate the color. Thank you.

Operator (participant)

Thank you. Once again, everyone, if you have any questions or comments, please press star, then one on your phone. Your next question is coming from David Hamburger from Morgan Stanley. Your line is live.

David Hamburger (Head of US Sector Corporate Credit Research)

Thank you very much. Again, I'd like to echo the sentiment. Lucy, you've always been very helpful answering questions and otherwise, and wish you the best in your new endeavor.

Lucy Rutishauser (EVP and CFO)

Of course, I have a—

David Hamburger (Head of US Sector Corporate Credit Research)

Of course. Last quarter, you had disclosed that you had renewed your three trans agreements representing 80% of the traditional Big Four. You had one negotiation that was active at the time. I assume, based on the disclosures now, I wanted to confirm, one, that you've renegotiated that agreement, seeing that you now mentioned you have nothing until the end of 2026. As well, you had mentioned on the earnings call that the guidance you gave for the first quarter reflected accruals based on the current state of negotiations with that counterparty. I'm just curious, how did that end up shake out based on what you were accruing, the result? Did that at all impact the distribution revenues in the first quarter?

Chris Ripley (President and CEO)

The short answer to that is no, it did not impact the Q1 results. We ended up, there is an agreement in principle with that MVPD, and we ended up right at where we were accruing at.

David Hamburger (Head of US Sector Corporate Credit Research)

Okay. And just generally speaking about the slower-than-expected improvement in churn, I mean, you did highlight, and we've all seen kind of the Charter numbers. It does appear still to be somewhat mixed when you look across the PTV universe. What are you expecting now as you looked at the second quarter guidance? Can you provide any additional thoughts or color on kind of your expectations for subscriber churn? I think in the past, you've actually disclosed that it's been pretty consistently in mid-single digits. Is that still the case?

Lucy Rutishauser (EVP and CFO)

Yeah. David, that is still the case. Our forecast does assume mid-single-digit percent. To your point, we were a little bit more optimistic in how quickly the subchurn would moderate. Again, it is just slightly off. I do want to remind you that on a year-over-year basis, putting aside the forecast, on a year-over-year basis, we grew distribution revenues significantly.

Chris Ripley (President and CEO)

I also would like to add, David, that everything that we've seen so far and the growth in gross retrans and our renewals on the reverse side, we are reiterating our two-year CAGR from 2023 to 2025 of mid-single digits.

Benjamin Soff (Director of Equity Research)

Thank you so much.

Rob Weisbord (COO and President of Local Media)

Thank you so much.

Operator (participant)

Thank you. That concludes our Q&A session. I'll now hand the conference back to Chris Ripley, President and CEO, for closing remarks. Please go ahead.

Chris Ripley (President and CEO)

Thank you all for joining our call today and supporting Sinclair. To the extent you have any questions or comments, please reach out to us.

Operator (participant)

Thank you. Everyone, this concludes today's event. You may disconnect at this time and have a wonderful day. Thank you for your participation.