Sinclair 10Q 2024 Q3 Quarterly report

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

COMMISSION FILE NUMBER:

333-271072 (Sinclair, Inc.)

000-26076 (Sinclair Broadcast Group, LLC)

Sinclair, Inc.

Sinclair Broadcast Group, LLC

(Exact name of Registrant as specified in its charter)


Maryland						92-1076143 (Sinclair, Inc.)
Maryland						52-1494660 (Sinclair Broadcast Group, LLC)
(State or other jurisdiction of Incorporation or organization)						(I.R.S. Employer Identification No.)

10706 Beaver Dam Road

Hunt Valley, Maryland 21030

(Address of principal executive office, zip code)

(410) 568-1500

(Registrant's telephone number, including area code)

None

(Former name, former address and former fiscal year, if changed since last report)

Securities registered by Sinclair, Inc. pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Class A Common Stock, par value $ 0.01 per share

SBGI

The NASDAQ Stock Market LLC

Securities registered by Sinclair Broadcast Group, LLC pursuant to Section12(b) of the Act: None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Sinclair, Inc.

Yes

☒

☐

Sinclair Broadcast Group, LLC

Yes

☐

☒

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such file).

Sinclair, Inc.

Yes

☒

☐

Sinclair Broadcast Group, LLC

Yes

☒

☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of "large accelerated filer", "accelerated filer" and "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Sinclair, Inc.

Large accelerated filer

☐

Accelerated filer

☒

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

Sinclair Broadcast Group, LLC

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☒

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.


Sinclair, Inc.			☐


Sinclair Broadcast Group, LLC			☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Sinclair, Inc.

Yes

☐

☒

Sinclair Broadcast Group, LLC

Yes

☐

☒

As of November 6, 2024, there were 42,645,544 shares of Sinclair, Inc. Class A Common Stock outstanding and 23,775,056 shares of Sinclair, Inc. Class B Common Stock outstanding.

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GENERAL

This combined report on Form 10-Q is filed by both Sinclair, Inc. ("Sinclair") and Sinclair Broadcast Group, LLC ("SBG"). Certain information contained in this document relating to SBG is filed by Sinclair and separately by SBG. SBG makes no representation as to information relating to Sinclair or its subsidiaries, except as it may relate to SBG and its subsidiaries. References in this report to "we," "us," "our," the "Company," and similar terms refer to Sinclair and its consolidated subsidiaries, including SBG, unless context indicates otherwise. As described under Company Reorganization in Note 1. Nature of Operations and Summary of Significant Accounting Policies within Sinclair's Consolidated Financial Statements below, upon consummation of the Reorganization (as defined therein) on June 1, 2023, Sinclair became the successor issuer to Sinclair Broadcast Group, Inc. ("Old Sinclair"), which, immediately following the Reorganization, was converted into a limited liability company. SBG files reports under the Securities Exchange Act of 1934, as amended (the "Exchange Act") solely to comply with Section 1018(a) of the indenture governing the 5.125% Senior Notes due 2027 of Sinclair Television Group, Inc. ("STG"), a wholly-owned subsidiary of SBG. References to SBG herein may also include its predecessor, Old Sinclair, as context indicates.

FORWARD-LOOKING STATEMENTS

This report includes or incorporates forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Exchange Act, and the U.S. Private Securities Litigation Reform Act of 1995. We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are subject to risks, uncertainties, and assumptions about us, including, among other things, the following risks. All risk factors are deemed to be related to both Sinclair and its subsidiaries, including SBG. Any risks only applicable to Sinclair are denoted as such.

Industry risks

•The business conditions of our advertisers and their ability to pay for services provided;

•the performance of networks and syndicators that provide us with programming content, as well as the performance of internally originated programming;

•multi-channel video programming distributors ("MVPD") and virtual MVPD's ("vMVPD," and together with MVPDs, "Distributors") subscriber churn due to the impact of technological changes, the proliferation of over-the-top ("OTT") direct-to-consumer platforms, the loss of key entertainment and sports programming previously exclusively available to subscribers, and economic conditions on consumers' desire to pay for subscription services;

•the business conditions of the Distributors we do business with and their ability to pay to broadcast our content on their distribution platforms;

•the loss of appeal of our local news, network content, syndicated program content, and sports programming, which may be unpredictable;

•the availability and cost of programming from networks and syndicators, as well as the cost of internally originated programming;

•for Sinclair, the availability and cost of rights to air professional tennis tournaments;

•our relationships with networks and their strategies to distribute their programming via means other than their local television affiliates, such as OTT or direct-to-consumer content;

•labor disputes and legislation and other union activity associated with film, acting, writing, music, and other guilds;

•the broadcasting community's ability to develop and adopt a viable mobile digital broadcast television ("mobile DTV") strategy and platform, such as the adoption of a next generation broadcast standard ("NextGen TV"), the consumer's appetite for mobile television, and the industry's acceptance of data distribution services;

•the impact of programming payments charged by networks pursuant to their affiliation agreements with broadcasters requiring compensation for network programming;

•the effects of declining live/appointment viewership as reported through rating systems and local television efforts to adopt and receive credit for same day viewing plus viewing on-demand thereafter;

•changes in television rating measurement methodologies that could negatively impact audience results;

•the ability of Distributors to coordinate and determine local advertising rates as a consortium;

•the lack of our ability to negotiate directly with vMVPD's for the distribution of much of our content;

•the operation of low power devices in the broadcast spectrum, which could interfere with our broadcast; and

•the impact of Distributors and OTTs offering "skinny" programming bundles that may not include television broadcast stations or other programming that we distribute.

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Regulatory risks

•The Federal Communications Commission ("FCC") task force appointed to help ensure a smoother roll-out of NextGen TV could impact business-use cases for the NextGen TV technology and the timeframe for the discontinuance of ATSC 1.0;

•the potential for additional governmental regulation of broadcasting or changes in those regulations and court actions interpreting those regulations, including ownership regulations limiting over-the-air television's ability to compete effectively (including regulations relating to joint sales agreements ("JSA"), shared services agreements ("SSA"), cross ownership rules, the national ownership cap, and the UHF discount), arbitrary enforcement by the FCC including indecency regulations, retransmission consent regulations, and political or other advertising restrictions, such as payola rules;

•the impact of FCC and Congressional efforts which may restrict a television station's retransmission consent negotiations;

•the impact of FCC rules requiring broadcast stations to publish, among other information, political advertising rates online;

•the potential impact from changes in lowest unit rate applicability associated with political advertising spots;

•our ability to obtain regulatory approval for transactions related to FCC licenses;

•the potential impact from changes in industry ownership and multicast rules;

•our ability to execute on our initiatives and goals related to environmental, social and governance ("ESG") matters and the increasing legal and regulatory focus on ESG by numerous jurisdictions with varying requirements; and

•the impact of foreign government rules related to digital and online assets.

Risks specific to us

•The amount paid to Diamond Sports Group, LLC ("DSG") as a result of the settlement agreement could have a material adverse effect on Sinclair and SBG's financial condition and results of operations;

•our ability to attract and maintain local, national, and network advertising and successfully participate in new sales channels such as programmatic and addressable advertising through business partnership ventures and the development of technology;

•our ability to service our debt obligations and operate our business under restrictions contained in our financing agreements;

•our use of derivative financial instruments to reduce interest rate risk may result in added volatility in the amount of interest expense recorded within our financial results and the amount of cash interest paid;

•our ability to successfully implement and monetize our own content management system designed to provide our viewers significantly improved content via the internet and other digital platforms;

•our ability to successfully renegotiate retransmission consent and distribution agreements for our existing and any acquired businesses with favorable terms;

•the ability of stations which we consolidate, but do not negotiate on their behalf, to successfully renegotiate retransmission consent and affiliation fees (cable network fees) agreements and comply with laws and regulations that apply to them;

•our ability to renew our FCC licenses;

•our ability to identify investment opportunities;

•our ability to successfully integrate any acquired businesses, as well as the success of our new content and distribution initiatives in a competitive environment, including CHARGE!, TBD, Comet, The Nest, other original programming, mobile DTV, FAST channels, and direct-to-consumer platforms;

•our ability to maintain our affiliation and programming service agreements with our networks and program service providers and, at renewal, to successfully negotiate these agreements with favorable terms;

•our ability to generate synergies and leverage new revenue opportunities;

•changes in the makeup of the population in the areas where our stations are located;

•our ability to effectively respond to technology affecting our industry;

•our ability to deploy NextGen TV nationwide, including the ability and appetite of manufacturers to install the technology within their products, as well as monetize the associated technology;

•the strength of ratings for our local news broadcasts including our news sharing arrangements;

•risks associated with the use of artificial intelligence by us and third parties, including our use in the operations of our business;

•the results of prior year tax audits by taxing authorities;

•for Sinclair, our ability to execute on our investment and growth strategies related to our subsidiary, Sinclair Ventures, LLC ("Ventures"); and

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•our ability to monetize our investments in real estate, venture capital and private equity holdings, and direct strategic investments in companies.

General risks

•The impact of changes in national and regional economies and credit and capital markets;

•loss of consumer confidence;

•the potential impact of changes in tax law;

•the activities of our competitors;

•risks associated with the inability of key suppliers and other third parties to provide services to us;

•geopolitical conditions, including the war in Ukraine, conflicts in the Middle East, and international trade sanctions, could negatively impact global supply prices and disrupt supply chain levels, which could negatively impact the operations of us, our customers', our vendors', and our Distributors';

•natural disasters and pandemics (such as the outbreak and worldwide spread of COVID-19) that impact our employees, Distributors, advertisers, suppliers, stations, and networks; and

•cybersecurity incidents, data privacy, and other information technology failures related to us and our vendors have, and in the future may, adversely affect us and disrupt our operations.

Other matters set forth in this report, including the Risk Factors set forth in Item 1A of this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2023, may also cause actual results in the future to differ materially from those described in the forward-looking statements. However, additional factors and risks not currently known to us or that we currently deem immaterial may also cause actual results in the future to differ materially from those described in the forward-looking statements. You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date on which they are made. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. In light of these risks, uncertainties, and assumptions, events described in the forward-looking statements discussed in this report might not occur.

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PART I. FINANCIAL INFORMATION

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SINCLAIR, INC.

SINCLAIR BROADCAST GROUP, LLC

FORM 10-Q

FOR THE QUARTER ENDED SEPTEMBER 30, 2024

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PART I. FINANCIAL INFORMATION			2

ITEM 1. FINANCIAL STATEMENTS			4

ITEM 1A. FINANCIAL STATEMENTS OF SINCLAIR, INC. (UNAUDITED)			4

CONSOLIDATED BALANCE SHEETS			5

CONSOLIDATED STATEMENTS OF OPERATIONS			6

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)			7

CONSOLIDATED STATEMENTS OF EQUITY AND REDEEMABLE NONCONTROLLING INTERESTS			8

CONSOLIDATED STATEMENTS OF CASH FLOWS			10

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS			11

ITEM 1B. FINANCIAL STATEMENTS OF SINCLAIR BROADCAST GROUP, LLC (UNAUDITED)			30

CONSOLIDATED BALANCE SHEETS			31

CONSOLIDATED STATEMENTS OF OPERATIONS			32

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)			33

CONSOLIDATED STATEMENTS OF MEMBER'S EQUITY (DEFICIT) AND REDEEMABLE NONCONTROLLING INTERESTS			34

CONSOLIDATED STATEMENTS OF CASH FLOWS			36

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS			37

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			54

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			68

ITEM 4. CONTROLS AND PROCEDURES			68

PART II. OTHER INFORMATION			70

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ITEM 1. LEGAL PROCEEDINGS			70

ITEM 1A. RISK FACTORS			70

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS			70

ITEM 3. DEFAULTS UPON SENIOR SECURITIES			70

ITEM 4. MINE SAFETY DISCLOSURES			70

ITEM 5. OTHER INFORMATION			70

ITEM 6. EXHIBITS			71

SIGNATURE			72

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ITEM 1. FINANCIAL STATEMENTS

This report includes the Consolidated Financial Statements of Sinclair and SBG in Item 1A and Item 1B, respectively.

ITEM 1A. FINANCIAL STATEMENTS OF SINCLAIR, INC.

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SINCLAIR, INC.

CONSOLIDATED BALANCE SHEETS

(in millions, except share and per share data) (Unaudited)


	As of September 30, 2024		As of December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents	$	536	$	662
Accounts receivable, net of allowance for doubtful accounts of $5 and $4, respectively	617		616
Income taxes receivable	7		8
Prepaid expenses and other current assets	195		189
Total current assets	1,355		1,475
Property and equipment, net	712		715
Operating lease assets	128		142


Goodwill	2,082		2,082
Indefinite-lived intangible assets	150		150
Customer relationships, net	318		369
Other definite-lived intangible assets, net	348		410
Other assets	692		742
Total assets (a)	$	5,785	$	6,085

LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	479	$	913

Current portion of notes payable, finance leases, and commercial bank financing	38		36
Current portion of operating lease liabilities	22		21
Current portion of program contracts payable	85		76
Other current liabilities	85		57
Total current liabilities	709		1,103
Notes payable, finance leases, and commercial bank financing, less current portion	4,093		4,139
Operating lease liabilities, less current portion	135		152
Program contracts payable, less current portion	16		14
Deferred tax liabilities	288		252
Other long-term liabilities	195		204
Total liabilities (a)	5,436		5,864
Commitments and contingencies (See Note 5)

Shareholders' equity:
Class A Common Stock, $.01 par value, 500,000,000 shares authorized, 42,584,090 and 39,737,682 shares issued and outstanding, respectively	1		1
Class B Common Stock, $.01 par value, 140,000,000 shares authorized, 23,775,056 and 23,775,056 shares issued and outstanding, respectively, convertible into Class A Common Stock	—		—
Additional paid-in capital	565		517
Accumulated deficit	(149)		(234)
Accumulated other comprehensive (loss) income	(2)		1
Total Sinclair shareholders' equity	415		285
Noncontrolling interests	(66)		(64)
Total equity	349		221
Total liabilities and equity	$	5,785	$	6,085

The accompanying notes are an integral part of these unaudited consolidated financial statements.

(a) Our consolidated total assets as of September 30, 2024 and December 31, 2023 include total assets of variable interest entities ("VIE") of $76 million and $85 million, respectively, which can only be used to settle the obligations of the VIEs. Our consolidated total liabilities as of both September 30, 2024 and December 31, 2023 include total liabilities of VIEs of $17 million for which the creditors of the VIEs have no recourse to us. See Note 8. Variable Interest Entities.

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SINCLAIR, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions, except share and per share data) (Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
REVENUES:
Media revenues	$	908	$	758	$	2,519	$	2,285
Non-media revenues	9		9		25		23
Total revenues	917		767		2,544		2,308

OPERATING EXPENSES:
Media programming and production expenses	414		400		1,247		1,211
Media selling, general and administrative expenses	201		176		591		557
Amortization of program costs	18		18		55		59
Non-media expenses	14		15		39		36
Depreciation of property and equipment	26		24		76		80
Corporate general and administrative expenses	41		45		149		165
Amortization of definite-lived intangible assets	37		42		113		124

Loss on deconsolidation of subsidiary	—		10		—		10
(Gain) loss on asset dispositions and other, net of impairment	(13)		—		(11)		11

Total operating expenses	738		730		2,259		2,253
Operating income	179		37		285		55

OTHER INCOME (EXPENSE):
Interest expense including amortization of debt discount and deferred financing costs	(78)		(77)		(230)		(227)
Gain on extinguishment of debt	—		4		1		15
Income from equity method investments	—		—		92		30
Other income (expense), net	24		(21)		22		(48)
Total other expense, net	(54)		(94)		(115)		(230)
Income (loss) before income taxes	125		(57)		170		(175)
INCOME TAX (PROVISION) BENEFIT	(29)		12		(30)		236
NET INCOME (LOSS)	96		(45)		140		61
Net loss attributable to the redeemable noncontrolling interests	—		—		—		4
Net income attributable to the noncontrolling interests	(2)		(1)		(6)		(15)
NET INCOME (LOSS) ATTRIBUTABLE TO SINCLAIR	$	94	$	(46)	$	134	$	50

EARNINGS PER COMMON SHARE ATTRIBUTABLE TO SINCLAIR:
Basic earnings per share	$	1.43	$	(0.74)	$	2.06	$	0.75
Diluted earnings per share	$	1.43	$	(0.74)	$	2.05	$	0.75
Basic weighted average common shares outstanding (in thousands)	66,355		63,325		65,570		65,670
Diluted weighted average common and common equivalent shares outstanding (in thousands)	66,526		63,325		65,709		65,727

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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SINCLAIR, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in millions) (Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Net income (loss)	$	96	$	(45)	$	140	$	61
Unrealized (loss) gain on interest rate swap, net of tax	(8)		2		(3)		8

Comprehensive income (loss)	88		(43)		137		69
Comprehensive loss attributable to the redeemable noncontrolling interests	—		—		—		4
Comprehensive income attributable to the noncontrolling interests	(2)		(1)		(6)		(15)
Comprehensive income (loss) attributable to Sinclair	$	86	$	(44)	$	131	$	58

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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SINCLAIR, INC.

CONSOLIDATED STATEMENTS OF EQUITY AND REDEEMABLE NONCONTROLLING INTERESTS

(in millions, except share and per share data) (Unaudited)


		Three Months Ended September 30, 2023
		Sinclair Shareholders
		Class A Common Stock					Class B Common Stock				Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income		Noncontrolling Interests		Total Equity
	Shares		Values			Shares		Values
BALANCE, June 30, 2023		39,274,843		$	1		23,775,056		$	—	$	510	$	184	$	7	$	(61)	$	641
Dividends declared and paid on Class A and Class B Common Stock ($0.25 per share)		—		—			—		—		—		(16)		—		—		(16)


Class A Common Stock issued pursuant to employee benefit plans		374,416		—			—		—		4		—		—		—		4



Distributions to noncontrolling interests		—		—			—		—		—		—		—		(2)		(2)


Other comprehensive income		—		—			—		—		—		—		2		—		2

Net (loss) income		—		—			—		—		—		(46)		—		1		(45)
BALANCE, September 30, 2023		39,649,259		$	1		23,775,056		$	—	$	514	$	122	$	9	$	(62)	$	584


	Nine Months Ended September 30, 2023
			Sinclair Shareholders
	Redeemable Noncontrolling Interests		Class A Common Stock			Class B Common Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income		Noncontrolling Interests		Total Equity
			Shares	Values		Shares	Values
BALANCE, December 31, 2022	$	194	45,847,879	$	1	23,775,056	$	—	$	624	$	122	$	1	$	(67)	$	681
Dividends declared and paid on Class A and Class B Common Stock ($0.75 per share)	—		—	—		—	—		—		(50)		—		—		(50)
Repurchases of Class A Common Stock	—		(8,785,022)	—		—	—		(153)		—		—		—		(153)

Class A Common Stock issued pursuant to employee benefit plans	—		2,586,402	—		—	—		43		—		—		—		43


Distributions to noncontrolling interests	—		—	—		—	—		—		—		—		(10)		(10)


Other comprehensive income	—		—	—		—	—		—		—		8		—		8
Redemption of redeemable subsidiary preferred equity, net	(190)		—	—		—	—		—		—		—		—		—

Net (loss) income	(4)		—	—		—	—		—		50		—		15		65
BALANCE, September 30, 2023	$	—	39,649,259	$	1	23,775,056	$	—	$	514	$	122	$	9	$	(62)	$	584

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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SINCLAIR, INC.

CONSOLIDATED STATEMENTS OF EQUITY AND NONCONTROLLING INTERESTS

(in millions, except share and per share data) (Unaudited)


		Three Months Ended September 30, 2024
		Sinclair Shareholders
		Class A Common Stock					Class B Common Stock				Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Noncontrolling Interests		Total Equity
	Shares		Values			Shares		Values
BALANCE, June 30, 2024		42,505,771		$	1		23,775,056		$	—	$	560	$	(227)	$	6	$	(65)	$	275

Dividends declared and paid on Class A and Class B Common Stock ($0.25 per share)		—		—			—		—		—		(16)		—		—		(16)



Class A Common Stock issued pursuant to employee benefit plans		78,319		—			—		—		5		—		—		—		5

Distributions to noncontrolling interests		—		—			—		—		—		—		—		(3)		(3)


Other comprehensive loss		—		—			—		—		—		—		(8)		—		(8)
Net income		—		—			—		—		—		94		—		2		96
BALANCE, September 30, 2024		42,584,090		$	1		23,775,056		$	—	$	565	$	(149)	$	(2)	$	(66)	$	349

		Nine Months Ended September 30, 2024
		Sinclair Shareholders
		Class A Common Stock					Class B Common Stock				Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Noncontrolling Interests		Total Equity
	Shares		Values			Shares		Values
BALANCE, December 31, 2023		39,737,682		$	1		23,775,056		$	—	$	517	$	(234)	$	1	$	(64)	$	221
Dividends declared and paid on Class A and Class B Common Stock ($0.75 per share)		—		—			—		—		—		(49)		—		—		(49)

Class A Common Stock issued pursuant to employee benefit plans		2,846,408		—			—		—		48		—		—		—		48
Distributions to noncontrolling interests		—		—			—		—		—		—		—		(8)		(8)
Other comprehensive loss		—		—			—		—		—		—		(3)		—		(3)

Net income		—		—			—		—		—		134		—		6		140
BALANCE, September 30, 2024		42,584,090		$	1		23,775,056		$	—	$	565	$	(149)	$	(2)	$	(66)	$	349

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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SINCLAIR, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions) (Unaudited)


	Nine Months Ended September 30,
	2024		2023
CASH FLOWS (USED IN) FROM OPERATING ACTIVITIES:
Net income	$	140	$	61
Adjustments to reconcile net income to net cash flows (used in) from operating activities:

Amortization of definite-lived intangible and other assets	113		124
Depreciation of property and equipment	76		80
Amortization of program costs	55		59
Stock-based compensation	45		42
Deferred tax provision (benefit)	36		(237)
(Gain) loss on asset dispositions and other, net of impairment	(7)		11
Loss on deconsolidation of subsidiary	—		10
Income from equity method investments	(92)		(30)
Loss from investments	5		78
Distributions from investments	3		31
Gain on extinguishment of debt	(1)		(15)
Change in assets and liabilities, net of acquisitions:
(Increase) decrease in accounts receivable	(5)		11
Decrease (increase) in prepaid expenses and other current assets	10		(39)
(Decrease) increase in accounts payable and accrued and other current liabilities	(408)		22
Net change in net income taxes payable/receivable	(11)		(2)
Decrease in program contracts payable	(61)		(68)

Other, net	2		5
Net cash flows (used in) from operating activities	(100)		143

CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property and equipment	(61)		(70)



Purchases of investments	(41)		(44)
Distributions and proceeds from investments	185		205
Other, net	3		6
Net cash flows from investing activities	86		97

CASH FLOWS USED IN FINANCING ACTIVITIES:

Repayments of notes payable, commercial bank financing, and finance leases	(52)		(76)
Repurchase of outstanding Class A Common Stock	—		(153)
Dividends paid on Class A and Class B Common Stock	(49)		(50)

Repurchase of redeemable subsidiary preferred equity	—		(190)
Distributions to noncontrolling interests, net	(8)		(10)

Other, net	(3)		(2)
Net cash flows used in financing activities	(112)		(481)

NET DECREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	(126)		(241)
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, beginning of period	662		884
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, end of period	$	536	$	643

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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SINCLAIR, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Nature of Operations

Sinclair, Inc. ("Sinclair") is a diversified media company with national reach and a strong focus on providing high-quality content on our local television stations and digital platforms. The content, distributed through our broadcast platform and third-party platforms, consists of programming provided by third-party networks and syndicators, local news, other original programming produced by us and our owned networks and professional sports. Additionally, we own digital media companies that are complementary to our extensive portfolio of television station related digital properties and we have interests in, own, manage, and/or operate technical and software services companies, research and development companies for the advancement of broadcast technology, and other media and non-media related businesses and assets, including real estate, venture capital, private equity, and direct investments.

For the quarter ended September 30, 2024, we had two reportable segments: local media and tennis. The local media segment consists primarily of our 185 broadcast television stations in 86 markets, which we own, provide programming and operating services pursuant to agreements commonly referred to as local marketing agreements ("LMA"), or provide sales services and other non-programming operating services pursuant to other outsourcing agreements (such as joint sales agreements ("JSA") and shared services agreements ("SSA")). These stations broadcast 638 channels as of September 30, 2024. For the purpose of this report, these 185 stations and 638 channels are referred to as "our" stations and channels. The tennis segment consists of Tennis Channel, a cable network which includes coverage of many of tennis' top tournaments and original professional sports and tennis lifestyle shows; Tennis Channel International streaming service; Tennis Channel Plus streaming service; T2 FAST, a 24-hours a day free ad-supported streaming television channel; and Tennis.com.

Principles of Consolidation

The consolidated financial statements include our accounts and those of our wholly-owned and majority-owned subsidiaries, and VIEs for which we are the primary beneficiary. Noncontrolling interests represent a minority owner's proportionate share of the equity in certain of our consolidated entities. Noncontrolling interests which may be redeemed by the holder, and the redemption is outside of our control, are presented as redeemable noncontrolling interests. All intercompany transactions and account balances have been eliminated in consolidation.

We consolidate VIEs when we are the primary beneficiary. We are the primary beneficiary of a VIE when we have the power to direct the activities of the VIE that most significantly impact the economic performance of the VIE and have the obligation to absorb losses or the right to receive returns that would be significant to the VIE. See Note 8. Variable Interest Entities for more information on our VIEs.

Investments in entities over which we have significant influence but not control are accounted for using the equity method of accounting. Income from equity method investments represents our proportionate share of net income generated by equity method investees.

Company Reorganization

On April 3, 2023, the company formerly known as Sinclair Broadcast Group, Inc., a Maryland corporation ("Old Sinclair"), entered into an Agreement of Share Exchange and Plan of Reorganization (the "Share Exchange Agreement") with Sinclair, and Sinclair Holdings, LLC, a Maryland limited liability company ("Sinclair Holdings"). The purpose of the transactions contemplated by the Share Exchange Agreement was to effect a holding company reorganization in which Sinclair would become the publicly-traded parent company of Old Sinclair.

Effective at 12:00 am Eastern U.S. time on June 1, 2023 (the "Share Exchange Effective Time"), pursuant to the Share Exchange Agreement and Articles of Share Exchange filed with the Maryland State Department of Assessments and Taxation, the share exchange between Sinclair and Old Sinclair was completed (the "Share Exchange"). In the Share Exchange, (i) each share or fraction of a share of Old Sinclair's Class A common stock, par value $0.01 per share ("Old Sinclair Class A Common Shares"), outstanding immediately prior to the Share Exchange Effective Time was exchanged on a one-for-one basis for an equivalent share of Sinclair's Class A common stock, par value $0.01 per share ("Sinclair Class A Common Shares"), and (ii) each share or fraction of a share of Old Sinclair's Class B common stock, par value $0.01 per share ("Old Sinclair Class B Common Shares"), outstanding immediately prior to the Share Exchange Effective Time was exchanged on a one-for-one basis for an equivalent share of Sinclair's Class B common stock, par value $0.01 per share ("Sinclair Class B Common Shares").

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SINCLAIR, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Immediately following the Share Exchange Effective Time, Old Sinclair converted from a Maryland corporation to a Maryland limited liability company named Sinclair Broadcast Group, LLC ("SBG"). On the day following the Share Exchange Effective Time (June 2, 2023), Sinclair Holdings became the intermediate holding company between Sinclair and SBG, and SBG transferred certain of its assets (the "Transferred Assets") to Ventures, a new indirect wholly-owned subsidiary of Sinclair. We refer to the Share Exchange and the related steps described above collectively as the "Reorganization." The Transferred Assets included technical and software services companies, intellectual property for the advancement of broadcast technology, and other media and non-media related businesses and assets including real estate, venture capital, private equity, and direct investments, as well as Compulse, a marketing technology and managed services company, and Tennis Channel and related assets. As a result of the Reorganization, the local media segment assets are owned and operated by SBG and the assets of the tennis segment and the Transferred Assets are owned and operated by Ventures.

At the Share Exchange Effective Time, Sinclair's articles of incorporation and bylaws were amended and restated to be the same in all material respects as the existing articles of incorporation and bylaws of Old Sinclair immediately prior to the Share Exchange. As a result, the Sinclair Class A Common Shares confer upon the holders thereof the same rights with respect to Sinclair that the holders of the Old Sinclair Class A Common Shares had with respect to Old Sinclair, and the Sinclair Class B Common Shares confer upon the holders thereof the same rights with respect to Sinclair that the holders of the Old Sinclair Class B Common Shares had with respect to Old Sinclair. Sinclair's Board of Directors, including its committees, and senior management team immediately after the Share Exchange were the same as Old Sinclair's immediately before the Share Exchange.

The Reorganization is considered transactions between entities under common control and as SBG and Ventures are both subsidiaries of Sinclair, there was no impact on the consolidated financial statements of Sinclair.

Interim Financial Statements

The consolidated financial statements for the three and nine months ended September 30, 2024 and 2023 are unaudited. In the opinion of management, such financial statements have been presented on the same basis as the audited consolidated financial statements and include all adjustments, consisting only of normal recurring adjustments necessary for a fair statement of the consolidated balance sheets, consolidated statements of operations, consolidated statements of comprehensive income (loss), consolidated statements of equity and redeemable noncontrolling interests, and consolidated statements of cash flows for these periods as adjusted for the adoption of recent accounting pronouncements.

As permitted under the applicable rules and regulations of the Securities and Exchange Commission (the "SEC"), the consolidated financial statements do not include all disclosures normally included with audited consolidated financial statements and, accordingly, should be read together with the audited consolidated financial statements and notes thereto in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC. The consolidated statements of operations presented in the accompanying consolidated financial statements are not necessarily representative of operations for an entire year.

Use of Estimates

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses in the consolidated financial statements and in the disclosures of contingent assets and liabilities. Actual results could differ from those estimates.

Recent Accounting Pronouncements

In October 2021, the FASB issued guidance to improve the accounting for acquired revenue contracts with customers in a business combination by addressing diversity in practice. ASU 2021-08 requires that an acquiring entity recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606, as if it had originated the contracts. The guidance is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. We adopted this guidance during the first quarter of 2023. The impact of the adoption did not have a material impact on our consolidated financial statements.

In November 2023, the FASB issued guidance to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, applied retrospectively. Early adoption is permitted. We are currently evaluating the impact of this guidance.

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SINCLAIR, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

In December 2023, the FASB issued guidance to enhance the transparency and decision usefulness of income tax disclosures, requiring annual disclosure of consistent categories and greater disaggregation of information in the rate reconciliation table; additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5 percent of the amount computed by multiplying pretax income or loss by the applicable statutory income tax rate); income taxes paid disaggregated by jurisdiction; and income or loss before income tax disaggregated between foreign and domestic. The guidance is effective for annual periods beginning after December 15, 2024, applied prospectively. Early adoption is permitted. We are currently evaluating the impact of this guidance.

In November 2024, the FASB issued guidance requiring disclosure of disaggregated information about certain income statement expense line items. The guidance is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. We are currently evaluating the impact of this guidance.

Broadcast Television Programming

We have agreements with programming syndicators for the rights to television programming over contract periods, which generally run from one to three years. Contract payments are made in installments over terms that are generally equal to or shorter than the contract period. Pursuant to accounting guidance for the broadcasting industry, an asset and a liability for the rights acquired and obligations incurred under a license agreement are reported on the balance sheet when the cost of each program is known or reasonably determinable, the program material has been accepted by the licensee in accordance with the conditions of the license agreement, and the program is available for its first showing or telecast. The portion of program contracts which becomes payable within one year is reflected as a current liability in the accompanying consolidated balance sheets.

The rights to this programming are reflected in the accompanying consolidated balance sheets at the lower of unamortized cost or fair value. Program costs are amortized on a straight-line basis except for contracts greater than three years which are amortized utilizing an accelerated method. Program costs estimated by management to be amortized in the succeeding year are classified as current assets. Payments of program contract liabilities are typically made on a scheduled basis and are not affected by amortization or fair value adjustments.

Fair value is determined utilizing a discounted cash flow model based on management's expectation of future advertising revenues, net of sales commissions, to be generated by the program material. We assess our program costs on a quarterly basis to ensure the costs are recorded at the lower of unamortized cost or fair value.

Hedge Accounting

We have determined that the interest rate swap meets the criteria for hedge accounting. The initial value of the interest rate swap and any changes in value in subsequent periods is included in accumulated other comprehensive (loss) income, with a corresponding change recorded in assets or liabilities depending on the position of the swap. Gains or losses on the monthly settlement of the interest rate swap are reflected in interest expense in our consolidated statements of operations. Cash flows related to the interest rate swap are classified as operating activities in our consolidated statements of cash flows. See Interest Rate Swap within Note 3. Notes Payable, Finance Leases, and Commercial Bank Financing for further discussion.

Non-cash Investing and Financing Activities

Leased assets obtained in exchange for new operating lease liabilities were $4 million for both the nine months ended September 30, 2024 and 2023. Leased assets obtained in exchange for new finance lease liabilities were $17 million for the nine months ended September 30, 2024. Non-cash investing activities included property and equipment purchases of $5 million for both the nine months ended September 30, 2024 and 2023.

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SINCLAIR, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Revenue Recognition

The following table presents our revenue disaggregated by type and segment (in millions):


For the three months ended September 30, 2024	Local Media		Tennis		Other		Eliminations		Total
Distribution revenue	$	383	$	51	$	—	$	—	$	434
Core advertising revenue	283		8		9		(5)		295
Political advertising revenue	138		—		—		—		138
Other media, non-media, and intercompany revenues	41		1		10		(2)		50
Total revenues	$	845	$	60	$	19	$	(7)	$	917

For the nine months ended September 30, 2024	Local Media		Tennis		Other		Eliminations		Total
Distribution revenue	$	1,151	$	154	$	—	$	—	$	1,305
Core advertising revenue	852		32		24		(13)		895
Political advertising revenue	202		—		—		—		202
Other media, non-media, and intercompany revenues	117		4		30		(9)		142
Total revenues	$	2,322	$	190	$	54	$	(22)	$	2,544

For the three months ended September 30, 2023	Local Media		Tennis		Other		Eliminations		Total
Distribution revenue	$	365	$	49	$	—	$	—	$	414
Core advertising revenue	281		9		6		(3)		293
Political advertising revenue	11		—		—		—		11
Other media, non-media, and intercompany revenues	40		1		11		(3)		49
Total revenues	$	697	$	59	$	17	$	(6)	$	767

For the nine months ended September 30, 2023	Local Media		Tennis		Other		Eliminations		Total
Distribution revenue	$	1,118	$	140	$	—	$	—	$	1,258
Core advertising revenue	861		32		18		(9)		902
Political advertising revenue	20		—		—		—		20
Other media, non-media, and intercompany revenues	102		2		30		(6)		128
Total revenues	$	2,101	$	174	$	48	$	(15)	$	2,308

Distribution Revenue. We have agreements with Distributors. We generate distribution revenue through fees received from these Distributors for the right to distribute our stations and other properties. Distribution arrangements are generally governed by multi-year contracts and the underlying fees are based upon a contractual monthly rate per subscriber. These arrangements represent licenses of intellectual property; revenue is recognized as the signal or network programming is provided to our customers (as usage occurs) which corresponds with the satisfaction of our performance obligation. Revenue is calculated based upon the contractual rate multiplied by an estimated number of subscribers. Our customers will remit payments based upon actual subscribers a short time after the conclusion of a month, which generally does not exceed 120 days. Historical adjustments to subscriber estimates have not been material.

Core Advertising Revenue. We generate core advertising revenue primarily from the sale of non-political advertising spots/impressions within our broadcast television and digital platforms.

Political Advertising Revenue. We generate political advertising revenue primarily from the sale of political advertising spots/impressions within our broadcast television and digital platforms.

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SINCLAIR, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

In accordance with ASC 606, we do not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) distribution arrangements which are accounted for as a sales/usage based royalty.

Deferred Revenue. We record deferred revenue when cash payments are received or due in advance of our performance, including amounts which are refundable. We classify deferred revenue as either current in other current liabilities or long-term in other long-term liabilities in our consolidated balance sheets based on the timing of when we expect to satisfy our performance obligations. Deferred revenue was $189 million and $178 million as of September 30, 2024 and December 31, 2023, respectively, of which $109 million and $124 million, respectively, was reflected in other long-term liabilities in our consolidated balance sheets. Deferred revenue recognized for the nine months ended September 30, 2024 and 2023, included in the deferred revenue balance as of December 31, 2023 and 2022, was $40 million and $44 million, respectively.

For the three months ended September 30, 2024, one customer accounted for 10% of our total revenues. For the nine months ended September 30, 2024, two customers accounted for 11% and 10%, respectively, of our total revenues. For the three months ended September 30, 2023, two customers accounted for 11% and 10%, respectively, of our total revenues. For the nine months ended September 30, 2023, two customers accounted for 11% and 10%, respectively, of our total revenues. As of September 30, 2024, three customers accounted for 11%, 10%, and 10%, respectively, of our accounts receivable, net. As of December 31, 2023, two customers accounted for 10% and 10%, respectively, of our accounts receivable, net. For purposes of this disclosure, a single customer may include multiple entities under common control.

Income Taxes

Our income tax provision for all periods consists of federal and state income taxes. The tax provision for the three and nine months ended September 30, 2024 and 2023 is based on the estimated effective tax rate applicable for the full year after taking into account discrete tax items and the effects of the noncontrolling interests. We provide a valuation allowance for deferred tax assets if we determine that it is more likely than not that some or all of the deferred tax assets will not be realized. In evaluating our ability to realize net deferred tax assets, we consider all available evidence, both positive and negative, including our past operating results, tax planning strategies, current and cumulative losses, and forecasts of future taxable income. In considering these sources of taxable income, we must make certain judgments that are based on the plans and estimates used to manage our underlying businesses on a long-term basis. A valuation allowance has been provided for deferred tax assets related to a substantial amount of our available state net operating loss carryforwards based on past operating results, expected timing of the reversals of existing temporary basis differences, alternative tax strategies, and projected future taxable income.

Our effective income tax rate for the three months ended September 30, 2024 was greater than the statutory rate primarily due to non-deductible expenses. Our effective income tax rate for the nine months ended September 30, 2024 was less than the statutory rate 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. Our effective income tax rate for the three months ended September 30, 2023 approximated the statutory rate. Our effective income tax rate for the nine months ended September 30, 2023 was greater 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 Internal Revenue Code Section 163(j) ("IRC Section 163(j)") as a result of the change in the tax classification of the legal entity owning the DSG business from a partnership to disregarded entity because of the exit of the sole minority investor.

We do not believe that our liability for unrecognized tax benefits would be materially impacted, in the next twelve months, as a result of the expected statute of limitations expirations, the application of limits under available state administrative practice exceptions, and the resolution of examination issues and settlements with federal and certain state tax authorities.

Reclassifications

Certain reclassifications have been made to prior years' consolidated financial statements to conform to the current year's presentation.

Subsequent Events

In November 2024, our Board of Directors declared a quarterly dividend of $0.25 per share, payable on December 16, 2024 to holders of record at the close of business on December 2, 2024.

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SINCLAIR, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

2. OTHER ASSETS:

Other assets as of September 30, 2024 and December 31, 2023 consisted of the following (in millions):


	As of September 30, 2024		As of December 31, 2023
Equity method investments	$	82	$	128
Other investments	349		387

Income tax receivable	143		131
Post-retirement plan assets	47		45
Other	71		51
Total other assets	$	692	$	742

Equity Method Investments

We have a portfolio of investments, including our investment in Diamond Sports Intermediate Holdings LLC ("DSIH"), and also a number of entities that are primarily focused on the development of real estate and other media and non-media businesses. During the nine months ended September 30, 2024, we sold one of our other media investments which had a book value of $37 million as of December 31, 2023 for proceeds of $130 million and recognized a gain of $93 million. No investments were individually significant for the periods presented.

Diamond Sports Intermediate Holdings LLC. We account for our equity interest in DSIH under the equity method of accounting. For the three and nine months ended September 30, 2024 and 2023, we recorded no equity method loss related to the investment because the carrying value of the investment is zero and we are not obligated to fund losses incurred by DSIH.

Other Investments

We measure our investments, excluding equity method investments, at fair value or, in situations where fair value is not readily determinable, we have the option to value investments at cost plus observable changes in value, less impairment. Additionally, certain investments are measured at net asset value ("NAV").

As of September 30, 2024 and December 31, 2023, we held $214 million and $162 million, respectively, in investments measured at fair value. As of September 30, 2024 and December 31, 2023, we held $104 million and $189 million, respectively, in investments measured at NAV. We recognized a fair value adjustment gain of $15 million and a loss of $28 million for the three and nine months ended September 30, 2024, respectively, and fair value adjustment losses of $26 million and $74 million for the three and nine months ended September 30, 2023, respectively, associated with these investments, which are reflected in other income (expense), net in our consolidated statements of operations. As of September 30, 2024 and December 31, 2023, our unfunded commitments related to our investments valued using the NAV practical expedient totaled $61 million and $74 million, respectively.

Investments accounted for utilizing the measurement alternative were $31 million and $36 million as of September 30, 2024 and December 31, 2023, respectively. We recorded a $2 million impairment related to one investment for the nine months ended September 30, 2024 and a $6 million impairment related to one investment for the nine months ended September 30, 2023, which are reflected in other income (expense), net in our consolidated statements of operations.

Note Receivable

We were party to an Accounts Receivable Securitization Facility ("A/R Facility"), held by Diamond Sports Finance SPV, LLC ("DSPV"), an indirect wholly-owned subsidiary of DSIH. On May 10, 2023, DSPV paid the Company approximately $199 million, representing the aggregate outstanding principal amount of the loans under the A/R Facility, accrued interest, and outstanding fees and expenses. The A/R Facility was terminated on March 14, 2024.

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SINCLAIR, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

3. NOTES PAYABLE, FINANCE LEASES, AND COMMERCIAL BANK FINANCING:

Bank Credit Agreement and Notes

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 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, we repurchased $27 million aggregate principal amount of the Term Loan B-2, due September 30, 2026, for consideration of $25 million. The portions of the Term Loan B-2 purchased were canceled immediately following their acquisition. We recognized a gain on extinguishment of the Term Loan B-2 of $1 million for the nine months ended September 30, 2024.

Finance Leases to Affiliates

The current portion of notes payable, finance leases, and commercial bank financing in our consolidated balance sheets includes finance leases to affiliates of $3 million and $2 million as of September 30, 2024 and December 31, 2023, respectively. Notes payable, finance leases, and commercial bank financing, less current portion, in our consolidated balance sheets includes finances leases to affiliates of $9 million and $5 million as of September 30, 2024 and December 31, 2023, respectively. See Note 9. Related Person Transactions.

Debt of Variable Interest Entities and Guarantees of Third-Party Obligations

STG jointly, severally, unconditionally, and irrevocably guaranteed $2 million of debt of certain third parties as of both September 30, 2024 and December 31, 2023, all of which related to consolidated VIEs and is included in our consolidated balance sheets as of both September 30, 2024 and December 31, 2023. We have also provided a guarantee that requires us to provide funding to Marquee regional sports network ("Marquee") if Marquee's free cash flow generated in the applicable year and its existing cash balance are insufficient to allow Marquee to make certain payments under certain of Marquee's agreements with affiliates of the Chicago Cubs, an affiliate of which is also a co-owner of Marquee. The funding obligation under the guarantee is subject to a maximum annual amount of $117 million with annual escalations of 4% for the next five years. We have determined that, as of September 30, 2024, it is not probable that we would have to perform under any of these guarantees. See Note 5. Commitments and Contingencies for additional information.

Interest Rate Swap

We entered into an interest rate swap effective February 7, 2023 and terminating on February 28, 2026 in order to manage a portion of our exposure to variable interest rates. The swap agreement has a notional amount of $600 million, bears a fixed interest rate of 3.9%, and we receive a floating rate of interest based on SOFR. See Hedge Accounting within Note 1. Nature of Operations and Summary of Significant Accounting Policies for further discussion. As of September 30, 2024 and December 31, 2023, the fair value of the interest rate swap was a liability of $3 million and an asset of $1 million, respectively, which are recorded in other current liabilities and other assets, respectively, in our consolidated balance sheets.

4. REDEEMABLE NONCONTROLLING INTERESTS:

We account for redeemable noncontrolling interests in accordance with ASC 480, Distinguishing Liabilities from Equity, and classify them as mezzanine equity in our consolidated balance sheets because their possible redemption is outside of the control of the Company. Our redeemable non-controlling interests previously consisted of the following:

Redeemable Subsidiary Preferred Equity. On August 23, 2019, Diamond Sports Holdings LLC ("DSH"), an indirect parent of Diamond Sports Group, LLC ("DSG") and indirect wholly-owned subsidiary of the Company, issued preferred equity (the "Redeemable Subsidiary Preferred Equity").

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SINCLAIR, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

On February 10, 2023, we purchased the remaining 175,000 units of the Redeemable Subsidiary Preferred Equity for an aggregate purchase price of $190 million, representing 95% of the sum of the remaining unreturned capital contribution of $175 million, and accrued and unpaid dividends up to, but not including, the date of purchase.

Dividends accrued for the nine months ended September 30, 2023 were $3 million and are reflected in net loss attributable to the redeemable noncontrolling interests in our consolidated statements of operations. Dividends accrued for the nine months ended September 30, 2023 were paid-in-kind and added to the liquidation preference, which was partially offset by certain required cash tax distributions.

5. COMMITMENTS AND CONTINGENCIES:

Litigation, Claims, and Regulatory Matters

We are a party to lawsuits, claims, and regulatory matters from time to time in the ordinary course of business. Actions currently pending are in various stages and no material judgments or decisions have been rendered by hearing boards or courts in connection with such actions. Except as noted below, we do not believe the outcome of these matters, individually or in the aggregate, will have a material effect on our financial statements.

FCC Matters

On May 22, 2020, the Federal Communications Commission ("FCC") released an Order and Consent Decree pursuant to which the Company agreed to pay $48 million to resolve the matters covered by a Notice of Apparent Liability for Forfeiture ("NAL") issued in December 2017 proposing a $13 million fine for alleged violations of the FCC's sponsorship identification rules by the Company and certain of its subsidiaries, the FCC's investigation of the allegations raised in the Hearing Designation Order issued in connection with the Company's proposed acquisition of Tribune, and a retransmission related matter. The Company submitted the $48 million payment on August 19, 2020. As part of the consent decree, the Company also agreed to implement a 4-year compliance plan. Two petitions were filed on June 8, 2020 seeking reconsideration of the Order and Consent Decree. The Company filed an opposition to the petitions on June 18, 2020, and the petitions remain pending. The consent decree expired on May 29, 2024.

On September 1, 2020, one of the individuals who filed a petition for reconsideration of the Order and Consent Decree filed a petition to deny the license renewal application of WBFF(TV), Baltimore, MD, and the license renewal applications of two other Baltimore, MD stations with which the Company has a JSA or LMA, Deerfield Media station WUTB(TV) and Cunningham Broadcasting Corporation ("Cunningham") station WNUV(TV). The Company filed an opposition to the petition on October 1, 2020. On January 18, 2024, a motion was filed to request substitution of the petitioner, who is deceased. On January 29, 2024, the Company filed (1) an opposition to the motion for substitution and (2) a motion to dismiss the petition to deny the renewal applications. An opposition was filed to the motion to dismiss on February 5, 2024, and the Company timely filed its reply on February 13, 2024, and the matter remains pending.

On September 2, 2020, the FCC adopted a Memorandum Opinion and Order and NAL against the licensees of several stations with whom the Company has LMAs, JSAs, and/or SSAs in response to a complaint regarding those stations' retransmission consent negotiations. The NAL proposed a $0.5 million penalty for each station, totaling $9 million. The licensees filed a response to the NAL on October 15, 2020, asking the FCC to dismiss the proceeding or, alternatively, to reduce the proposed forfeiture to $25,000 per station. On July 28, 2021, the FCC issued a forfeiture order in which the $0.5 million penalty was upheld for all but one station. A Petition for Reconsideration of the forfeiture order was filed on August 7, 2021. On March 14, 2022, the FCC released a Memorandum Opinion and Order and Order on Reconsideration, which reaffirmed the forfeiture order, and dismissed (and in the alternative, denied) the Petition for Reconsideration, and stated that because the fines were not paid within the period stated in the July 2021 forfeiture order the FCC may refer the case to the U.S. Department of Justice ("DOJ") for enforcement of the forfeiture pursuant to Section 504 of the Communications Act. Our understanding is that enforcement remains pending. The Company is not a party to this forfeiture order; however, our consolidated financial statements include an accrual of additional expenses of $8 million for the above legal matters during the year ended December 31, 2021, as we consolidate these stations as VIEs.

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SINCLAIR, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

On September 21, 2022, the FCC released an NAL against the licensees of a number of stations, including 83 Company stations and several stations with whom the Company has LMAs, JSAs, and/or SSAs, for violation of the FCC's limitations on commercial matter in children's television programming related to KidsClick network programming distributed by the Company in 2018. The NAL proposed a fine of $2.7 million against the Company, and fines ranging from $20,000 to $26,000 per station for the other licensees, including the LMA, JSA, and/or SSA stations, for a total of $3.4 million. As of September 30, 2024, we have accrued $3.4 million. On October 21, 2022, the Company filed a written response seeking reduction of the proposed fine amount. On September 6, 2024, the FCC denied the Company's request for reduction of the fine (and similar requests filed by certain other licensees) and issued a forfeiture order imposing the fine as proposed in the NAL. The Company and all other affected licensees filed a joint petition for reconsideration of the forfeiture order on October 7, 2024 and the matter remains pending.

Other Matters

On November 6, 2018, the Company agreed to enter into a proposed consent decree with the DOJ. This consent decree resolves the DOJ's investigation into the sharing of pacing information among certain stations in some local markets. The DOJ filed the consent decree and related documents in the U.S. District Court for the District of Columbia on November 13, 2018. The U.S. District Court for the District of Columbia entered the consent decree on May 22, 2019. The consent decree is not an admission of any wrongdoing by the Company and does not subject the Company to any monetary damages or penalties. The Company believes that even if the pacing information was shared as alleged, it would not have impacted any pricing of advertisements or the competitive nature of the market. The consent decree requires the Company to adopt certain antitrust compliance measures, including the appointment of an Antitrust Compliance Officer, consistent with what the DOJ has required in previous consent decrees in other industries. The consent decree also requires the Company's stations not to exchange pacing and certain other information with other stations in their local markets, which the Company's management had already instructed them not to do.

The Company is aware of twenty-two putative class action lawsuits that were filed against the Company following published reports of the DOJ investigation into the exchange of pacing data within the industry. On October 3, 2018, these lawsuits were consolidated in the Northern District of Illinois. The consolidated action alleges that the Company and thirteen other broadcasters conspired to fix prices for commercials to be aired on broadcast television stations throughout the United States and engaged in unlawful information sharing, in violation of the Sherman Antitrust Act. The consolidated action seeks damages, attorneys' fees, costs and interest, as well as injunctions against adopting practices or plans that would restrain competition in the ways the plaintiffs have alleged. The Court denied the defendants' motion to dismiss on November 6, 2020. Discovery commenced shortly after that and is continuing. Under the current schedule set by the Court, fact discovery is scheduled to close 90 days after a Special Master completes his review of the plaintiffs' objections to the defendant's privilege claims. That privilege review is ongoing. On August 18, 2023, the defendants filed objections to the Special Master's First Report and Recommendations with the Court. The Court overruled the defendants' objections on January 31, 2024. The Special Master has not indicated when he expects to complete his privilege review. On December 8, 2023, the Court granted final approval of the settlements the plaintiffs had reached with four of the original defendants (CBS, Fox, Cox Media, and ShareBuilders), who agreed to pay a total of $48 million to settle the plaintiffs' claims against them. The Company and the other non-settling defendants continue to believe the lawsuits are without merit and intend to vigorously defend themselves against all such claims.

On July 19, 2023, as part of bankruptcy proceedings of DSG, an independently managed and unconsolidated subsidiary of Sinclair, DSG and its wholly-owned subsidiary, Diamond Sports Net, LLC, filed a complaint (the "Diamond Litigation"), under seal, in the United States Bankruptcy Court for the Southern District of Texas naming certain subsidiaries of Sinclair, including SBG and STG and certain officers of SBG and STG, as defendants.

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In the complaint, plaintiffs challenged a series of transactions involving SBG and certain of its subsidiaries, on the one hand, and DSG and its subsidiaries, on the other hand, since SBG acquired the former Fox Sports regional sports networks from The Walt Disney Company in August 2019. The complaint alleged, among other things, that the management services agreement (the "MSA") entered into by STG and DSG was not fair to DSG and was designed to benefit STG and SBG; that the Bally's Corporation ("Bally's") transaction in November 2020 through which Bally's acquired naming rights to certain regional sports networks was not fair to DSG and was designed to benefit STG and SBG; and that certain distributions made by DSG that were used to pay down preferred equity of DSH, were inappropriate and were conducted at a time when DSG was insolvent. The complaint also alleged that SBG and its subsidiaries (other than DSG and its subsidiaries) received payments or indirect benefits of approximately $1.5 billion as a result of the alleged misconduct. The complaint asserted a variety of claims, including certain fraudulent transfers of assets, unlawful distributions and payments, breaches of contracts, unjust enrichment and breaches of fiduciary duties. The plaintiffs sought, among other relief, avoidance of fraudulent transfers and unlawful distributions, and unspecified monetary damages to be determined.

On March 1, 2024, the court approved a global settlement and release of all claims associated with the Diamond Litigation, which settlement included an amendment to the MSA. Sinclair entered into the settlement, without admitting any fault or wrongdoing. The settlement terms included, among other things, DSG's dismissal with prejudice of its $1.5 billion litigation against Sinclair and all other defendants, along with the full and final satisfaction and release of all claims in that litigation against all defendants, including Sinclair and its subsidiaries, in exchange for 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. During the first quarter of 2024, we paid $50 million related to the settlement. The final settlement payment was made during the second quarter of 2024 and of the total $495 million settlement amount paid, $347 million was paid by STG and $148 million was paid by Ventures.

As described under Note 3. Notes Payable, Finance Leases, and Commercial Bank Financing we have provided a guarantee that requires us to provide funding to Marquee under certain circumstances. On July 19, 2024, Marquee sent us a funding notice seeking $29 million under the Marquee guarantee by August 1, 2024 purportedly to make payments under certain agreements to affiliates of the Chicago Cubs, an affiliate of which is also a co-owner of Marquee. Based on the information provided to us by Marquee, Marquee has sufficient cash to make such payments without funding under the Marquee guarantee. For this and other reasons, we do not believe we are contractually required to provide funding under the Marquee guarantee at this time and have so informed Marquee. On August 2, 2024, Marquee sent us another letter claiming that our failure to timely pay the amounts subject to Marquee's funding notice constitutes a breach of the Marquee guarantee and requesting payment of such amounts no later than August 17, 2024 at which time Marquee has stated it will pursue any and all available remedies pursuant to the Marquee guarantee. This dispute may result in litigation, and based on our expectation of Marquee's claims, we believe we have meritorious defenses and intend to vigorously defend against such claims.

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

6. EARNINGS PER SHARE:

The following table reconciles income (numerator) and shares (denominator) used in our computations of basic and diluted earnings per share for the periods presented (in millions, except share amounts which are reflected in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Income (Numerator)
Net income (loss)	$	96	$	(45)	$	140	$	61
Net loss attributable to the redeemable noncontrolling interests	—		—		—		4
Net income attributable to the noncontrolling interests	(2)		(1)		(6)		(15)

Numerator for basic and diluted earnings per common share available to common shareholders	$	94	$	(46)	$	134	$	50

Shares (Denominator)
Basic weighted-average common shares outstanding	66,355		63,325		65,570		65,670
Dilutive effect of stock-settled appreciation rights and outstanding stock options	171		—		139		57
Diluted weighted-average common and common equivalent shares outstanding	66,526		63,325		65,709		65,727

The following table shows the weighted-average stock-settled appreciation rights and outstanding stock options (in thousands) that are excluded from the calculation of diluted earnings per common share as the inclusion of such shares would be anti-dilutive:


	Three Months Ended September 30,		Nine Months Ended September 30,
	2024	2023	2024	2023
Weighted-average stock-settled appreciation rights and outstanding stock options excluded	5,120	5,120	6,328	4,137

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

7. SEGMENT DATA:

We measure segment performance based on operating income (loss). For the quarter ended September 30, 2024, we had two reportable segments, local media and tennis. Our local media segment includes our television stations, original networks and content and provides these through free over-the-air programming to television viewing audiences for stations in markets located throughout the continental United States, as well as distributes the content of these stations to MVPDs for distribution to their customers in exchange for contractual fees. See Revenue Recognition under Note 1. Nature of Operations and Summary of Significant Accounting Policies for further detail. Our tennis segment provides viewers coverage of many of tennis' top tournaments and original professional sport and tennis lifestyle shows. Other and corporate are not reportable segments but are included for reconciliation purposes. Other primarily consists of non-broadcast digital and internet solutions, technical services, and non-media investments. Corporate costs primarily include our costs to operate as a public company and to operate our corporate headquarters location. All our businesses are located within the United States. As a result of the Reorganization, the local media segment assets are owned and operated by SBG, the assets of the tennis segment are owned and operated by Ventures, and the other Transferred Assets, which are included in other and corporate, are owned and operated by Ventures.

Segment financial information is included in the following tables for the periods presented (in millions):


As of September 30, 2024	Local Media		Tennis		Other & Corporate		Eliminations		Consolidated
Assets	$	4,546	$	271	$	971	$	(3)	$	5,785


For the three months ended September 30, 2024	Local Media		Tennis		Other & Corporate		Eliminations			Consolidated
Revenue	$	845	$	60	$	19	$	(7)	(a)	$	917
Depreciation of property and equipment and amortization of definite-lived intangibles and other assets	58		5		1		(1)			63
Amortization of program costs	18		—		—		—			18
Corporate general and administrative expenses	24		1		16		—			41

Gain on asset dispositions and other, net of impairment	(11)		—		(2)		—			(13)

Operating income (loss)	182		11		(14)		—			179
Interest expense including amortization of debt discount and deferred financing costs	78		—		—		—			78
Income (loss) from equity method investments	1		(1)		—		—			—

For the nine months ended September 30, 2024	Local Media		Tennis		Other & Corporate		Eliminations			Consolidated
Revenue	$	2,322	$	190	$	54	$	(22)	(a)	$	2,544
Depreciation of property and equipment and amortization of definite-lived intangibles and other assets	174		16		2		(3)			189
Amortization of program costs	55		—		—		—			55
Corporate general and administrative expenses	94		2		53		—			149

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

Operating income (loss)	306		32		(53)		—			285
Interest expense including amortization of debt discount and deferred financing costs	230		—		—		—			230
Income (loss) from equity method investments	1		(2)		93		—			92

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For the three months ended September 30, 2023	Local Media		Tennis		Other & Corporate		Eliminations			Consolidated
Revenue	$	697	$	59	$	17	$	(6)	(a)	$	767
Depreciation of property and equipment and amortization of definite-lived intangibles and other assets	59		5		3		(1)			66

Amortization of program costs	18		—		—		—			18
Corporate general and administrative expenses	31		1		13		—			45
Loss on deconsolidation of subsidiary	—		—		10		—			10
(Gain) loss on asset dispositions and other, net of impairment	(2)		—		2		—			—

Operating income (loss)	53		13		(29)		—			37
Interest expense including amortization of debt discount and deferred financing costs	77		—		—		—			77


For the nine months ended September 30, 2023	Local Media		Tennis		Other & Corporate		Eliminations			Consolidated
Revenue	$	2,101	$	174	$	48	$	(15)	(a)	$	2,308
Depreciation of property and equipment and amortization of definite-lived intangibles and other assets	185		15		6		(2)			204

Amortization of program costs	59		—		—		—			59
Corporate general and administrative expenses	109		1		55		—			165
Loss on deconsolidation of subsidiary	—		—		10		—			10
(Gain) loss on asset dispositions and other, net of impairment	(5)		—		16		—			11

Operating income (loss)	116		34		(95)		—			55
Interest expense including amortization of debt discount and deferred financing costs	227		—		—		—			227
Income from equity method investments	—		—		30		—			30

(a)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 revenue for services provided by other to local media, which is eliminated in consolidation.

8. VARIABLE INTEREST ENTITIES:

Certain of our stations provide services to other station owners within the same respective market through agreements, such as LMAs, where we provide programming, sales, operational, and administrative services, and JSAs and SSAs, where we provide non-programming, sales, operational, and administrative services. In certain cases, we have also entered into purchase agreements or options to purchase the license related assets of the licensee. We typically own the majority of the non-license assets of the stations, and in some cases where the licensee acquired the license assets concurrent with our acquisition of the non-license assets of the station, we have provided guarantees to the bank for the licensee's acquisition financing. The terms of the agreements vary, but generally have initial terms of over five years with several optional renewal terms. Based on the terms of the agreements and the significance of our investment in the stations, we are the primary beneficiary when, subject to the ultimate control of the licensees, we have the power to direct the activities which significantly impact the economic performance of the VIE through the services we provide and we absorb losses and returns that would be considered significant to the VIEs. The fees paid between us and the licensees pursuant to these arrangements are eliminated in consolidation.

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The carrying amounts and classification of the assets and liabilities of the VIEs mentioned above, which have been included in our consolidated balance sheets as of the dates presented, were as follows (in millions):


	As of September 30, 2024		As of December 31, 2023
ASSETS
Current assets:


Accounts receivable, net	$	20	$	23
Other current assets	4		3
Total current assets	24		26


Property and equipment, net	9		11

Goodwill and indefinite-lived intangible assets	15		15
Definite-lived intangible assets, net	28		33

Total assets	$	76	$	85

LIABILITIES
Current liabilities:
Other current liabilities	$	15	$	14


Notes payable, finance leases and commercial bank financing, less current portion	5		6


Other long-term liabilities	3		3
Total liabilities	$	23	$	23

The amounts above represent the combined assets and liabilities of the VIEs described above, for which we are the primary beneficiary. Total liabilities associated with certain outsourcing agreements and purchase options with certain VIEs, which are excluded from the above, were $129 million as of September 30, 2024 and $130 million as of December 31, 2023, as these amounts are eliminated in consolidation. The assets of each of these consolidated VIEs can only be used to settle the obligations of the VIE. As of September 30, 2024, all of the liabilities are non-recourse to us except for the debt of certain VIEs. See Debt of Variable Interest Entities and Guarantees of Third-Party Obligations under Note 3. Notes Payable, Finance Leases, and Commercial Bank Financing for further discussion. The risk and reward characteristics of the VIEs are similar.

Other VIEs

We have several investments in entities which are considered VIEs. However, we do not participate in the management of these entities, including the day-to-day operating decisions or other decisions which would allow us to control the entity, and therefore, we are not considered the primary beneficiary of these VIEs.

The carrying amounts of our investments in these VIEs for which we are not the primary beneficiary were $102 million and $192 million as of September 30, 2024 and December 31, 2023, respectively, and are included in other assets in our consolidated balance sheets. See Note 2. Other Assets for more information related to our equity investments. Our maximum exposure is equal to the carrying value of our investments. The income and loss related to equity method investments and other investments are recorded in income from equity method investments and other income (expense), net, respectively, in our consolidated statements of operations. We recorded losses of $55 million and $77 million for the three and nine months ended September 30, 2024, respectively, and gains of $5 million and $43 million for the three and nine months ended September 30, 2023, respectively, related to these investments.

We hold substantially all the equity of DSIH and provide certain management and general and administrative services to subsidiaries of DSIH. However, it was determined that we are not the primary beneficiary because we lack the ability to control the activities that most significantly drive the economics of the business. The carrying amount of our investment in DSIH is zero and there is no obligation for us to provide additional financial support.

We were also party to the A/R Facility held by an indirect wholly-owned subsidiary of DSIH which had a maturity date of September 23, 2024. The A/R Facility was terminated on March 14, 2024. See Note Receivable within Note 2. Other Assets.

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

9. RELATED PERSON TRANSACTIONS:

Transactions With Our Controlling Shareholders

David, Frederick, J. Duncan, and Robert Smith (collectively, the "controlling shareholders") are brothers and hold substantially all of our Class B Common Stock and some of our Class A Common Stock. We engaged in the following transactions with them and/or entities in which they have substantial interests:

Leases. Certain assets used by us and our operating subsidiaries are leased from entities owned by the controlling shareholders. Lease payments made to these entities were $2 million and $5 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. For further information, see Note 3. Notes Payable, Finance Leases, and Commercial Bank Financing.

Charter Aircraft. We lease aircraft owned by certain controlling shareholders. For all leases, we incurred expenses of less than $0.1 million and $0.1 million for the three and nine months ended September 30, 2024, respectively, and $0.2 million for the nine months ended September 30, 2023.

Real Estate Sales. A real estate project we had an investment in was purchased by a controlling shareholder during the three months ended September 30, 2024. We recognized a gain of $4 million for both the three and nine months ended September 30, 2024 as a result of this transaction.

Cunningham Broadcasting Corporation

Cunningham owns a portfolio of television stations, including: WNUV-TV Baltimore, Maryland; WRGT-TV Dayton, Ohio; WVAH-TV Charleston, West Virginia; WMYA-TV Anderson, South Carolina; WTTE-TV Columbus, Ohio; WDBB-TV Birmingham, Alabama; WBSF-TV Flint, Michigan; WGTU-TV/WGTQ-TV Traverse City/Cadillac, Michigan; WEMT-TV Tri-Cities, Tennessee; WYDO-TV Greenville, North Carolina; KBVU-TV/KCVU-TV Eureka/Chico-Redding, California; WPFO-TV Portland, Maine; KRNV-DT/KENV-DT Reno, Nevada/Salt Lake City, Utah; and KTXD-TV in Dallas, Texas (collectively, the "Cunningham Stations"). Certain of our stations provide services to the Cunningham Stations pursuant to LMAs or JSAs and SSAs. See Note 8. Variable Interest Entities, for further discussion of the scope of services provided under these types of arrangements.

All the non-voting stock of the Cunningham Stations is owned by trusts for the benefit of the children of our controlling shareholders. We consolidate certain subsidiaries of Cunningham with which we have variable interests through various arrangements related to the Cunningham Stations.

The services provided to WNUV-TV, WMYA-TV, WTTE-TV, WRGT-TV and WVAH-TV are governed by a master agreement which has a current term that expires on July 1, 2028 and there is one additional five-year renewal term remaining with final expiration on July 1, 2033. We also executed purchase agreements to acquire the license related assets of these stations from Cunningham, which grant us the right to acquire, and grant Cunningham the right to require us to acquire, subject to applicable FCC rules and regulations, 100% of the capital stock or the assets of these individual subsidiaries of Cunningham. Pursuant to the terms of this agreement we are obligated to pay Cunningham an annual fee for the television stations equal to the greater of (i) 3% of each station's annual net broadcast revenue or (ii) $6 million. The aggregate purchase price of these television stations increases by 6% annually. A portion of the fee is required to be applied to the purchase price to the extent of the 6% increase. The cumulative prepayments made under these purchase agreements were $68 million and $65 million as of September 30, 2024 and December 31, 2023, respectively. The remaining aggregate purchase price of these stations, net of prepayments, as of both September 30, 2024 and December 31, 2023, was approximately $54 million. Additionally, we provide services to WDBB-TV pursuant to an LMA, which expires April 22, 2025, and have a purchase option to acquire for $0.2 million. We paid Cunningham, under these agreements, $3 million and $9 million for the three and nine months ended September 30, 2024, respectively, and $3 million and $9 million for the three and nine months ended September 30, 2023, respectively.

The agreements with KBVU-TV/KCVU-TV, KRNV-DT/KENV-DT, WBSF-TV, WDBB-TV, WEMT-TV, WGTU-TV/WGTQ-TV, WPFO-TV, and WYDO-TV expire between April 2025 and November 2029 and certain stations have renewal provisions for successive eight-year periods.

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

As we consolidate the licensees as VIEs, the amounts we earn or pay under the arrangements are eliminated in consolidation and the gross revenues of the stations are reported in our consolidated statements of operations. Our consolidated revenues include $41 million and $109 million for the three and nine months ended September 30, 2024, respectively, and $33 million and $102 million for the three and nine months ended September 30, 2023, respectively, related to the Cunningham Stations.

We have an agreement with Cunningham to provide master control equipment and provide master control services to a station in Johnstown, PA with which Cunningham has an LMA that expires in June 2025. Under the agreement, Cunningham paid us an initial fee of $1 million and pays us $0.3 million annually for master control services plus the cost to maintain and repair the equipment. In addition, we have an agreement with Cunningham to provide a news share service with the Johnstown, PA station for an annual fee of $0.6 million, which increases by 3% on each anniversary and expires in November 2025.

We have multi-cast agreements with Cunningham Stations in the Eureka/Chico-Redding, California; Tri-Cities, Tennessee; Anderson, South Carolina; Baltimore, Maryland; Portland, Maine; Charleston, West Virginia; Dallas, Texas; and Greenville, North Carolina markets. In exchange for carriage of these networks in their markets, we paid $0.2 million and $1.2 million for the three and nine months ended September 30, 2024, respectively, and $0.5 million and $1.5 million for the three and nine months ended September 30, 2023, respectively, under these agreements.

Leased Property by Real Estate Ventures

Prior to September 2024, certain of our real estate ventures entered into leases with entities owned by members of the Smith Family. Total rent payments received under these leases were $0.3 million and $1 million for three and nine months ended September 30, 2024, respectively, and $0.3 million and $1 million for the three and nine months ended September 30, 2023, respectively.

Diamond Sports Intermediate Holdings LLC

We account for our equity interest in DSIH as an equity method investment.

Management Services Agreement. We have a management services agreement with DSG, a wholly-owned subsidiary of DSIH, in which we provide DSG with affiliate sales and marketing services and general and administrative services. Pursuant to this agreement, the local media segment recorded $18 million and $48 million of revenue for the three and nine months ended September 30, 2024, respectively, and $14 million and $36 million of revenue for the three and nine months ended September 30, 2023, respectively.

Note receivable. We received payments totaling $203 million from DSPV for the nine months ended September 30, 2023, related to the note receivable associated with the A/R Facility. The A/R Facility was terminated on March 14, 2024.

We recorded revenue of $3 million and $11 million for the three and nine months ended September 30, 2024, respectively, and $4 million and $15 million for the three and nine months ended September 30, 2023, respectively, related to certain other transactions between DSIH and the Company.

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Employees

Jason Smith, an employee of the Company, is the son of Frederick Smith, who is a Vice President of the Company and a member of the Company's Board of Directors. Jason Smith received total compensation of $0.3 million and $0.2 million for the three months ended September 30, 2024 and 2023, respectively, and $0.8 million and $0.6 million for the nine months ended September 30, 2024 and 2023, respectively, consisting of salary and bonus, and was granted 37,566 shares of restricted stock, vesting over two years, and 500,000 stock appreciation rights, vesting over two years, for the nine months ended September 30, 2024.

Ethan White, an employee of the Company, is the son-in-law of J. Duncan Smith, who is a Vice President of the Company and Secretary of the Company's Board of Directors. Ethan White received total compensation of $0.1 million for both the three months ended September 30, 2024 and 2023 and $0.2 million for both the nine months ended September 30, 2024 and 2023, consisting of salary and bonus, and was granted 1,503 and 1,252 shares of restricted stock, vesting over two years, for the nine months ended September 30, 2024 and 2023, respectively.

Amberly Thompson, an employee of the Company, is the daughter of Donald Thompson, who is an Executive Vice President and Chief Human Resources Officer of the Company. Amberly Thompson received total compensation of less than $0.1 million for both the three months ended September 30, 2024 and 2023 and $0.1 million for both the nine months ended September 30, 2024 and 2023, consisting of salary and bonus.

Frederick Smith is the brother of David Smith, Executive Chairman of the Company and Chairman of the Company's Board of Directors; Robert Smith, a member of the Company's Board of Directors; and J. Duncan Smith. Frederick Smith received total compensation of $0.2 million for both the three months ended September 30, 2024 and 2023 and $0.6 million for both the nine months ended September 30, 2024 and 2023, consisting of salary and bonus.

J. Duncan Smith is the brother of David Smith, Frederick Smith, and Robert Smith. J. Duncan Smith received total compensation of $0.2 million for both the three months ended September 30, 2024 and 2023 and $0.6 million for both the nine months ended September 30, 2024 and 2023, consisting of salary and bonus.

10. FAIR VALUE MEASUREMENTS:

Accounting guidance provides for valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). A fair value hierarchy using three broad levels prioritizes the inputs to valuation techniques used to measure fair value. The following is a brief description of those three levels:

•Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.

•Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

•Level 3: Unobservable inputs that reflect the reporting entity's own assumptions.

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The following table sets forth the face value and fair value of our financial assets and liabilities for the periods presented (in millions):


	As of September 30, 2024				As of December 31, 2023
	Face Value		Fair Value		Face Value		Fair Value
Level 1:
Investments in equity securities	N/A		$	20	N/A		$	6
Money market funds	N/A		$	381	N/A		$	588
Deferred compensation assets	N/A		$	47	N/A		$	45
Deferred compensation liabilities	N/A		$	46	N/A		$	44

Level 2:
Investments in equity securities (a)	N/A		$	136	N/A		$	110
Interest rate swap (b)	N/A		$	3	N/A		$	1
STG (c):
5.500% Senior Notes due 2030	$	485	$	350	$	485	$	362
5.125% Senior Notes due 2027	$	274	$	238	$	274	$	248
4.125% Senior Secured Notes due 2030	$	737	$	574	$	737	$	521
Term Loan B-2, due September 30, 2026	$	1,178	$	1,116	$	1,215	$	1,124
Term Loan B-3, due April 1, 2028	$	716	$	530	$	722	$	595
Term Loan B-4, due April 21, 2029	$	733	$	543	$	739	$	602

Debt of variable interest entities (c)	$	7	$	7	$	7	$	7
Debt of non-media subsidiaries (c)	$	—	$	—	$	15	$	15

Level 3:
Investments in equity securities (d)	N/A		$	58	N/A		$	46

N/A - Not applicable

(a)Consists of warrants to acquire marketable common equity securities. The fair value of the warrants are derived from the quoted trading prices of the underlying common equity securities less the exercise price.

(b)We entered into an interest rate swap effective February 7, 2023 and terminating on February 28, 2026 in order to manage a portion of our exposure to variable interest rates. The swap agreement has a notional amount of $600 million, bears a fixed interest rate of 3.9%, and we receive a floating rate of interest based on SOFR. The fair value of the interest rate swap was a liability as of September 30, 2024 and an asset as of December 31, 2023. See Hedge Accounting within Note 1. Nature of Operations and Summary of Significant Accounting Policies and Interest Rate Swap within Note 3. Notes Payable, Finance Leases, and Commercial Bank Financing.

(c)Amounts are carried in our consolidated balance sheets net of debt discount, premium, and deferred financing cost, which are excluded in the above table, of $38 million and $46 million as of September 30, 2024 and December 31, 2023, respectively.

(d)Amounts primarily relate to warrants and options to acquire common equity in Bally's. We recorded fair value adjustment gains of $18 million and $10 million for the three and nine months ended September 30, 2024, respectively, and losses of $10 million and $27 million for the three and nine months ended September 30, 2023, respectively. The fair value of the warrants is primarily derived from the quoted trading prices of the underlying common equity. The fair value of the options is derived utilizing the Black Scholes valuation model. The most significant inputs include the trading price of the underlying common stock and the exercise price of the options, which range from $30 to $45 per share.

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SINCLAIR, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes the changes in financial assets measured at fair value on a recurring basis and categorized as Level 3 under the fair value hierarchy for the three and nine months ended September 30, 2024 and 2023 (in millions):


Options and Warrants
Three Months Ended September 30, 2024			Nine Months Ended September 30, 2024
Fair value at June 30, 2024	$	42	Fair value at December 31, 2023	$	46


Measurement adjustments	16		Measurement adjustments	12
Fair value at September 30, 2024	$	58	Fair value at September 30, 2024	$	58


Options and Warrants
Three Months Ended September 30, 2023			Nine Months Ended September 30, 2023
Fair value at June 30, 2023	$	58	Fair value at December 31, 2022	$	75


Measurement adjustments	(10)		Measurement adjustments	(27)

Fair value at September 30, 2023	$	48	Fair value at September 30, 2023	$	48

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ITEM 1B. FINANCIAL STATEMENTS OF SINCLAIR BROADCAST GROUP, LLC

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SINCLAIR BROADCAST GROUP, LLC

CONSOLIDATED BALANCE SHEETS

(in millions) (Unaudited)


	As of September 30, 2024		As of December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents	$	202	$	319
Accounts receivable, net of allowance for doubtful accounts of $4 as of both periods	560		568
Income taxes receivable	8		7
Prepaid expenses and other current assets	126		139
Total current assets	896		1,033
Property and equipment, net	700		692
Operating lease assets	128		142


Goodwill	2,016		2,016
Indefinite-lived intangible assets	123		123
Customer relationships, net	202		238
Other definite-lived intangible assets, net	347		409
Other assets	201		184
Total assets (a)	$	4,613	$	4,837

LIABILITIES AND MEMBER'S EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	437	$	851

Current portion of notes payable, finance leases, and commercial bank financing	38		36
Current portion of operating lease liabilities	22		21
Current portion of program contracts payable	85		76
Other current liabilities	76		50
Total current liabilities	658		1,034
Notes payable, finance leases, and commercial bank financing, less current portion	4,093		4,124
Operating lease liabilities, less current portion	135		152
Program contracts payable, less current portion	16		14
Deferred tax liabilities	306		283
Other long-term liabilities	148		158
Total liabilities (a)	5,356		5,765
Commitments and contingencies (See Note 5)

SBG member's deficit:

Accumulated deficit	(674)		(865)
Accumulated other comprehensive (loss) income	(2)		1
Total SBG member's deficit	(676)		(864)
Noncontrolling interests	(67)		(64)
Total deficit	(743)		(928)
Total liabilities and deficit	$	4,613	$	4,837

The accompanying notes are an integral part of these unaudited consolidated financial statements.

(a) SBG's consolidated total assets as of September 30, 2024 and December 31, 2023 include total assets of variable interest entities ("VIE") of $76 million and $85 million, respectively, which can only be used to settle the obligations of the VIEs. SBG's consolidated total liabilities as of both September 30, 2024 and December 31, 2023 include total liabilities of VIEs of $17 million for which the creditors of the VIEs have no recourse to SBG. See Note 7. Variable Interest Entities.

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SINCLAIR BROADCAST GROUP, LLC

CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions) (Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
REVENUES:
Media revenues	$	845	$	697	$	2,322	$	2,203
Non-media revenues	—		—		—		10
Total revenues	845		697		2,322		2,213

OPERATING EXPENSES:
Media programming and production expenses	384		371		1,149		1,166
Media selling, general and administrative expenses	188		164		549		539
Amortization of program costs	18		18		55		59
Non-media expenses	2		3		6		22
Depreciation of property and equipment	25		25		76		80
Corporate general and administrative expenses	24		31		100		147
Amortization of definite-lived intangible assets	33		34		98		114

Loss on deconsolidation of subsidiary	—		10		—		10
(Gain) loss on asset dispositions and other, net of impairment	(11)		(3)		(11)		7
Total operating expenses	663		653		2,022		2,144
Operating income	182		44		300		69

OTHER INCOME (EXPENSE):
Interest expense including amortization of debt discount and deferred financing costs	(78)		(77)		(230)		(227)
Gain on extinguishment of debt	—		4		1		15
Income from equity method investments	—		—		—		31
Other income (expense), net	3		2		36		(51)
Total other expense, net	(75)		(71)		(193)		(232)
Income (loss) before income taxes	107		(27)		107		(163)
INCOME TAX (PROVISION) BENEFIT	(25)		6		(15)		236
NET INCOME (LOSS)	82		(21)		92		73
Net loss attributable to the redeemable noncontrolling interests	—		—		—		4
Net income attributable to the noncontrolling interests	(2)		(1)		(5)		(15)
NET INCOME (LOSS) ATTRIBUTABLE TO SBG	$	80	$	(22)	$	87	$	62

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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SINCLAIR BROADCAST GROUP, LLC

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in millions) (Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Net income (loss)	$	82	$	(21)	$	92	$	73
Unrealized (loss) gain on interest rate swap, net of tax	(8)		2		(3)		8

Comprehensive income (loss)	74		(19)		89		81
Comprehensive loss attributable to the redeemable noncontrolling interests	—		—		—		4
Comprehensive income attributable to the noncontrolling interests	(2)		(1)		(5)		(15)
Comprehensive income (loss) attributable to SBG	$	72	$	(20)	$	84	$	70

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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SINCLAIR BROADCAST GROUP, LLC

CONSOLIDATED STATEMENTS OF MEMBER'S EQUITY (DEFICIT) AND REDEEMABLE NONCONTROLLING INTERESTS

(in millions, except share and per share data) (Unaudited)


			Three Months Ended September 30, 2023
			SBG Member
	Accumulated Deficit	Accumulated Other Comprehensive Income	Noncontrolling Interests		Total Deficit

BALANCE, June 30, 2023			$	(418)	$	7	$	(61)	$	(472)



Deemed dividend to parent			(20)		—		—		(20)
Distribution to parent			(52)		—		—		(52)
Distributions to noncontrolling interests			—		—		(3)		(3)
Other comprehensive income			—		2		—		2
Net (loss) income			(22)		—		1		(21)
BALANCE, September 30, 2023			$	(512)	$	9	$	(63)	$	(566)


	Nine Months Ended September 30, 2023
											SBG Member
	Redeemable Noncontrolling Interests		Old Class A Common Stock			Old Class B Common Stock			Old Additional Paid-In Capital		Retained Earnings (Accumulated Deficit)		Accumulated Other Comprehensive Income		Noncontrolling Interests		Total Equity (Deficit)
			Shares	Values		Shares	Values
BALANCE, December 31, 2022	$	194	45,847,879	$	1	23,775,056	$	—	$	624	$	122	$	1	$	(67)	$	681
Dividends declared and paid on Old Sinclair Class A and Class B Common Stock ($0.25 per share)	—		—	—		—	—		—		(18)		—		—		(18)
Repurchases of Old Sinclair Class A Common Stock	—		(8,785,022)	—		—	—		(153)		—		—		—		(153)
Old Sinclair Class A Common Stock issued pursuant to employee benefit plans	—		2,274,558	—		—	—		40		—		—		—		40
Old Sinclair Class A and Class B Common Stock converted to SBG member's equity	—		(39,337,415)	(1)		(23,775,056)	—		—		—		—		—		(1)
Deemed dividend to parent	—		—	—		—	—		(511)		(626)		—		(1)		(1,138)
Distribution to parent	—		—	—		—	—		—		(52)		—		—		(52)
Repurchase of redeemable subsidiary preferred equity	(190)		—	—		—	—		—		—		—		—		—
Distributions to noncontrolling interests	—		—	—		—	—		—		—		—		(10)		(10)
Other comprehensive income	—		—	—		—	—		—		—		8		—		8
Net (loss) income	(4)		—	—		—	—		—		62		—		15		77
BALANCE, September 30, 2023	$	—	—	$	—	—	$	—	$	—	$	(512)	$	9	$	(63)	$	(566)

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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SINCLAIR BROADCAST GROUP, LLC

CONSOLIDATED STATEMENTS OF MEMBER'S DEFICIT AND NONCONTROLLING INTERESTS

(in millions) (Unaudited)


	Three Months Ended September 30, 2024
	SBG Member
	Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Noncontrolling Interests		Total Deficit

BALANCE, June 30, 2024	$	(714)	$	6	$	(66)	$	(774)
Distributions to member, net	(40)		—		—		(40)
Distributions to noncontrolling interests	—		—		(3)		(3)
Other comprehensive loss	—		(8)		—		(8)
Net income	80		—		2		82
BALANCE, September 30, 2024	$	(674)	$	(2)	$	(67)	$	(743)

	Nine Months Ended September 30, 2024
	SBG Member
	Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Noncontrolling Interests		Total Deficit

BALANCE, December 31, 2023	$	(865)	$	1	$	(64)	$	(928)
Contributions from member, net	104		—		—		104
Distributions to noncontrolling interests	—		—		(8)		(8)
Other comprehensive loss	—		(3)		—		(3)
Net income	87		—		5		92
BALANCE, September 30, 2024	$	(674)	$	(2)	$	(67)	$	(743)

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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SINCLAIR BROADCAST GROUP, LLC

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions) (Unaudited)


	Nine Months Ended September 30,
	2024		2023
CASH FLOWS (USED IN) FROM OPERATING ACTIVITIES:
Net income	$	92	$	73
Adjustments to reconcile net income to net cash flows from operating activities:

Amortization of definite-lived intangible and other assets	98		114
Depreciation of property and equipment	76		80
Amortization of program costs	55		59
Equity-based compensation	42		34
Deferred tax benefit	24		(237)
(Gain) loss on asset dispositions and other, net of impairment	(7)		7
Loss on deconsolidation of subsidiary	—		10
Income from equity method investments	—		(31)
(Income) loss from investments	(25)		77
Distributions from investments	—		29
Gain on extinguishment of debt	(1)		(15)
Change in assets and liabilities, net of acquisitions and asset transfer to Ventures:
Decrease in accounts receivable	2		30
Decrease (increase) in prepaid expenses and other current assets	27		(10)
Net change in due to/from member	(2)		(12)
(Decrease) increase in accounts payable and accrued and other current liabilities	(394)		27
Net change in net income taxes payable/receivable	(13)		(2)
Decrease in program contracts payable	(61)		(68)

Other, net	1		7
Net cash flows (used in) from operating activities	(86)		172

CASH FLOWS (USED IN) FROM INVESTING ACTIVITIES:
Acquisition of property and equipment	(61)		(71)



Purchases of investments	(4)		(37)
Distributions and proceeds from investments	44		204
Other, net	1		6
Net cash flows (used in) from investing activities	(20)		102

CASH FLOWS USED IN FINANCING ACTIVITIES:

Repayments of notes payable, commercial bank financing, and finance leases	(51)		(76)
Repurchase of outstanding Old Sinclair Class A Common Stock	—		(153)
Dividends paid on Old Sinclair Class A and Class B Common Stock	—		(18)

Repurchase of redeemable subsidiary preferred equity	—		(190)

Contributions from (distributions to) member, net	48		(429)
Distributions to noncontrolling interests, net	(8)		(10)

Other, net	—		(3)
Net cash flows used in financing activities	(11)		(879)

NET DECREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	(117)		(605)
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, beginning of period	319		884
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, end of period	$	202	$	279

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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SINCLAIR BROADCAST GROUP, LLC

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Nature of Operations

Sinclair Broadcast Group, LLC ("SBG"), a Maryland limited liability company and a wholly owned subsidiary of Sinclair, Inc. ("Sinclair"), is a diversified media company with national reach and a strong focus on providing high-quality content on SBG's local television stations and digital properties. The content, distributed through SBG's broadcast platform and third-party platforms, consists of programming provided by third-party networks and syndicators, local news and other original programming produced by SBG and SBG owned networks. Additionally, prior to the Reorganization (as defined below in Company Reorganization), SBG had interests in, owned, managed, and/or operated Tennis Channel, digital media companies, technical and software services companies, research and development companies for the advancement of broadcast technology, and other media and non-media related businesses and assets, including real estate, venture capital, private equity, and direct investments.

For the quarter ended September 30, 2024, SBG had one reportable segment: local media. The local media segment consists primarily of SBG's 185 broadcast television stations in 86 markets, which SBG owns, provides programming and operating services pursuant to agreements commonly referred to as local marketing agreements ("LMA"), or provides sales services and other non-programming operating services pursuant to other outsourcing agreements (such as joint sales agreements ("JSA") and shared services agreements ("SSA")). These stations broadcast 638 channels as of September 30, 2024. For the purpose of this report, these 185 stations and 638 channels are referred to as "SBG" stations and channels.

Principles of Consolidation

The consolidated financial statements include SBG's accounts and those of SBG's wholly-owned and majority-owned subsidiaries, and VIEs for which SBG is the primary beneficiary. Noncontrolling interests represent a minority owner's proportionate share of the equity in certain of SBG's consolidated entities. Noncontrolling interests which may be redeemed by the holder, and the redemption is outside of SBG's control, are presented as redeemable noncontrolling interests. All intercompany transactions and account balances have been eliminated in consolidation.

SBG consolidates VIEs when SBG is the primary beneficiary. SBG is the primary beneficiary of a VIE when SBG has the power to direct the activities of the VIE that most significantly impact the economic performance of the VIE and has the obligation to absorb losses or the right to receive returns that would be significant to the VIE. See Note 7. Variable Interest Entities for more information on SBG's VIEs.

Investments in entities over which SBG has significant influence but not control are accounted for using the equity method of accounting. Income from equity method investments represents SBG's proportionate share of net income generated by equity method investees.

Company Reorganization

On April 3, 2023, the company formerly known as Sinclair Broadcast Group, Inc., a Maryland corporation ("Old Sinclair"), entered into an Agreement of Share Exchange and Plan of Reorganization (the "Share Exchange Agreement") with Sinclair and Sinclair Holdings, LLC, a Maryland limited liability company ("Sinclair Holdings"). The purpose of the transactions contemplated by the Share Exchange Agreement was to effect a holding company reorganization in which Sinclair would become the publicly-traded parent company of Old Sinclair.

Effective at 12:00 am Eastern U.S. time on June 1, 2023 (the "Share Exchange Effective Time"), pursuant to the Share Exchange Agreement and Articles of Share Exchange filed with the Maryland State Department of Assessments and Taxation, the share exchange between Sinclair and Old Sinclair was completed (the "Share Exchange"). Immediately following the Share Exchange Effective Time, Old Sinclair converted from a Maryland corporation to a Maryland limited liability company named Sinclair Broadcast Group, LLC. On the day following the Share Exchange Effective Time, Sinclair Holdings became the intermediate holding company between Sinclair and SBG, and SBG transferred certain of its assets (the "Transferred Assets") to Sinclair Ventures, LLC, a new indirect wholly-owned subsidiary of Sinclair ("Ventures"). The Share Exchange and the related steps described above collectively are referred to as the "Reorganization." The Transferred Assets included technical and software services companies, intellectual property for the advancement of broadcast technology, and other media and non-media related businesses and assets including real estate, venture capital, private equity, and direct investments, as well as Compulse, a marketing technology and managed services company, and Tennis Channel and related assets.

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SINCLAIR BROADCAST GROUP, LLC

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

As a result of the Reorganization, SBG's consolidated statement of operations for the nine months ended September 30, 2023 includes five months of activity related to the Transferred Assets prior to the Reorganization. Subsequent to June 1, 2023, the assets and liabilities of the Transferred Assets are no longer included within SBG's consolidated balance sheets. Any discussions related to results, operations, and accounting policies associated with the Transferred Assets refer to the periods prior to the Reorganization.

Interim Financial Statements

SBG's consolidated financial statements for the three and nine months ended September 30, 2024 and 2023 are unaudited. In the opinion of management, such financial statements have been presented on the same basis as the audited consolidated financial statements and include all adjustments, consisting only of normal recurring adjustments necessary for a fair statement of the consolidated balance sheets, consolidated statements of operations, consolidated statements of comprehensive income (loss), consolidated statements of equity and redeemable noncontrolling interests, consolidated statements of member's deficit and consolidated statements of cash flows for these periods as adjusted for the adoption of recent accounting pronouncements.

As permitted under the applicable rules and regulations of the Securities and Exchange Commission (the "SEC"), SBG's consolidated financial statements do not include all disclosures normally included with audited consolidated financial statements and, accordingly, should be read together with the audited consolidated financial statements and notes thereto in Sinclair's Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC. SBG's consolidated statements of operations presented in the accompanying consolidated financial statements are not necessarily representative of operations for an entire year.

Use of Estimates

Recent Accounting Pronouncements

In October 2021, the FASB issued guidance to improve the accounting for acquired revenue contracts with customers in a business combination by addressing diversity in practice. ASU 2021-08 requires that an acquiring entity recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606, as if it had originated the contracts. The guidance is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. SBG adopted this guidance during the first quarter of 2023. The impact of the adoption did not have a material impact on SBG's consolidated financial statements.

In November 2023, the FASB issued guidance to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, applied retrospectively. Early adoption is permitted. SBG is currently evaluating the impact of this guidance.

In December 2023, the FASB issued guidance to enhance the transparency and decision usefulness of income tax disclosures, requiring annual disclosure of consistent categories and greater disaggregation of information in the rate reconciliation table; additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5 percent of the amount computed by multiplying pretax income or loss by the applicable statutory income tax rate); income taxes paid disaggregated by jurisdiction; and income or loss before income tax disaggregated between foreign and domestic. The guidance is effective for annual periods beginning after December 15, 2024, applied prospectively. Early adoption is permitted. SBG is currently evaluating the impact of this guidance.

In November 2024, the FASB issued guidance requiring disclosure of disaggregated information about certain income statement expense line items. The guidance is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. SBG is currently evaluating the impact of this guidance.

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SINCLAIR BROADCAST GROUP, LLC

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Broadcast Television Programming

SBG has agreements with programming syndicators for the rights to television programming over contract periods, which generally run from one to three years. Contract payments are made in installments over terms that are generally equal to or shorter than the contract period. Pursuant to accounting guidance for the broadcasting industry, an asset and a liability for the rights acquired and obligations incurred under a license agreement are reported on the balance sheet when the cost of each program is known or reasonably determinable, the program material has been accepted by the licensee in accordance with the conditions of the license agreement, and the program is available for its first showing or telecast. The portion of program contracts which becomes payable within one year is reflected as a current liability in the accompanying consolidated balance sheets.

Fair value is determined utilizing a discounted cash flow model based on management's expectation of future advertising revenues, net of sales commissions, to be generated by the program material. SBG assesses the program costs on a quarterly basis to ensure the costs are recorded at the lower of unamortized cost or fair value.

Hedge Accounting

SBG has determined that the interest rate swap meets the criteria for hedge accounting. The initial value of the interest rate swap and any changes in value in subsequent periods is included in accumulated other comprehensive (loss) income, with a corresponding change recorded in assets or liabilities depending on the position of the swap. Gains or losses on the monthly settlement of the interest rate swap are reflected in interest expense in SBG's consolidated statements of operations. Cash flows related to the interest rate swap are classified as operating activities in SBG's consolidated statements of cash flows. See Interest Rate Swap within Note 3. Notes Payable, Finance Leases, and Commercial Bank Financing for further discussion.

Non-cash Investing and Financing Activities

Leased assets obtained in exchange for new operating lease liabilities were $3 million and $4 million for the nine months ended September 30, 2024 and 2023, respectively. Leased assets obtained in exchange for new finance lease liabilities were $17 million for the nine months ended September 30, 2024. Non-cash investing activities included property and equipment purchases of $5 million for both the nine months ended September 30, 2024 and 2023.

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SINCLAIR BROADCAST GROUP, LLC

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Revenue Recognition

The following table presents SBG's revenue disaggregated by type and segment (in millions):


For the three months ended September 30, 2024	Local Media
Distribution revenue	$	383
Core advertising revenue	283
Political advertising revenue	138
Other media and intercompany revenues	41
Total revenues	$	845

For the nine months ended September 30, 2024	Local Media
Distribution revenue	$	1,151
Core advertising revenue	852
Political advertising revenue	202
Other media and intercompany revenues	117
Total revenues	$	2,322

For the three months ended September 30, 2023	Local Media
Distribution revenue	$	365
Core advertising revenue	281
Political advertising revenue	11
Other media, non-media, and intercompany revenues	40
Total revenues	$	697

For the nine months ended September 30, 2023	Local Media		Other		Eliminations		Total
Distribution revenue	$	1,118	$	76	$	—	$	1,194
Core advertising revenue	861		29		(5)		885
Political advertising revenue	20		—		—		20
Other media, non-media, and intercompany revenues	102		14		(2)		114
Total revenues	$	2,101	$	119	$	(7)	$	2,213

Distribution Revenue. SBG has agreements with multi-channel video programming distributors ("MVPD") and virtual MVPDs ("vMVPD," and together with MVPDs, "Distributors"). SBG generates distribution revenue through fees received from these Distributors for the right to distribute SBG's stations and other properties. Distribution arrangements are generally governed by multi-year contracts and the underlying fees are based upon a contractual monthly rate per subscriber. These arrangements represent licenses of intellectual property; revenue is recognized as the signal or network programming is provided to SBG's customers (as usage occurs) which corresponds with the satisfaction of SBG's performance obligation. Revenue is calculated based upon the contractual rate multiplied by an estimated number of subscribers. SBG's customers will remit payments based upon actual subscribers a short time after the conclusion of a month, which generally does not exceed 120 days. Historical adjustments to subscriber estimates have not been material.

Core Advertising Revenue. SBG generates core advertising revenue primarily from the sale of non-political advertising spots/impressions within broadcast television and digital platforms.

Political Advertising Revenue. SBG generates political advertising revenue primarily from the sale of political advertising spots/impressions within broadcast television and digital platforms.

In accordance with ASC 606, SBG does not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) distribution arrangements which are accounted for as a sales/usage based royalty.

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SINCLAIR BROADCAST GROUP, LLC

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Deferred Revenue. SBG records deferred revenue when cash payments are received or due in advance of performance, including amounts which are refundable. SBG classifies deferred revenue as either current in other current liabilities or long-term in other long-term liabilities in SBG's consolidated balance sheets based on the timing of when SBG expects to satisfy performance obligations. Deferred revenue was $179 million and $171 million as of September 30, 2024 and December 31, 2023, respectively, of which $109 million and $124 million, respectively, was reflected in other long-term liabilities in SBG's consolidated balance sheets. Deferred revenue recognized for the nine months ended September 30, 2024 and 2023, included in the deferred revenue balance as of December 31, 2023 and 2022, was $35 million and $39 million, respectively.

For the three months ended September 30, 2024, one customer accounted for 10% of SBG's total revenues. For the nine months ended September 30, 2024, two customers accounted for 11% and 10%, respectively, of SBG's total revenues. For the three months ended September 30, 2023, one customer accounted for 11% of SBG's total revenues. For the nine months ended September 30, 2023, two customers accounted for 11% and 10%, respectively, of SBG's total revenues. As of September 30, 2024, three customers accounted for 11%, 10%, and 10%, respectively, of SBG's accounts receivable, net. As of December 31, 2023, two customers accounted for 10% and 10%, respectively, of SBG's accounts receivable, net. For purposes of this disclosure, a single customer may include multiple entities under common control.

Income Taxes

SBG's income tax provision for all periods consists of federal and state income taxes. The tax provision for the three and nine months ended September 30, 2024 and 2023 is based on the estimated effective tax rate applicable for the full year after taking into account discrete tax items and the effects of the noncontrolling interests. SBG provides a valuation allowance for deferred tax assets if it is determined that it is more likely than not that some or all of the deferred tax assets will not be realized. In evaluating SBG's ability to realize net deferred tax assets, SBG considers all available evidence, both positive and negative, including past operating results, tax planning strategies, current and cumulative losses, and forecasts of future taxable income. In considering these sources of taxable income, SBG must make certain judgments that are based on the plans and estimates used to manage SBG's underlying businesses on a long-term basis. A valuation allowance has been provided for deferred tax assets related to a substantial amount of SBG's available state net operating loss carryforwards based on past operating results, expected timing of the reversals of existing temporary basis differences, alternative tax strategies, and projected future taxable income.

SBG's effective income tax rate for the three months ended September 30, 2024 was greater than the statutory rate primarily due to non-deductible expenses. SBG's effective income tax rate for the nine months ended September 30, 2024 was less than the statutory rate 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. SBG's effective income tax rate for the three months ended September 30, 2023 was less than the statutory rate primarily due to non-deductible expenses offset by federal tax credits. SBG's effective income tax rate for the nine months ended September 30, 2023 was greater 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.

SBG does not believe that our liability for unrecognized tax benefits would be materially impacted, in the next twelve months, as a result of the expected statute of limitations expirations, the application of limits under available state administrative practice exceptions, and the resolution of examination issues and settlements with federal and certain state tax authorities.

Reclassifications

Certain reclassifications have been made to prior years' consolidated financial statements to conform to the current year's presentation.

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

2. OTHER ASSETS:

Other assets as of September 30, 2024 and December 31, 2023 consisted of the following (in millions):


	As of September 30, 2024		As of December 31, 2023
Equity method investments	$	2	$	1
Other investments	4		—

Income tax receivable	143		131

Other	52		52
Total other assets	$	201	$	184

Equity Method Investments

Prior to the Reorganization, SBG had a portfolio of investments, including a number of entities that are primarily focused on the development of real estate and other media and non-media businesses. SBG has an investment in Diamond Sports Intermediate Holdings LLC ("DSIH").

Diamond Sports Intermediate Holdings LLC. SBG's equity interest in DSIH is accounted for under the equity method of accounting. For the three and nine months ended September 30, 2024 and 2023, SBG recorded no equity method loss related to the investment because the carrying value of the investment is zero and SBG is not obligated to fund losses incurred by DSIH.

Other Investments

SBG's investments, excluding equity method investments, were accounted for at fair value or, in situations where fair value is not readily determinable, SBG had the option to value investments at cost plus observable changes in value, less impairment. Additionally, certain investments were measured at net asset value ("NAV").

All of the investments measured at fair value and NAV were transferred to Ventures as part of the Reorganization. SBG recognized a fair value adjustment loss of $73 million for the nine months ended September 30, 2023 associated with these investments, which is reflected in other income (expense), net in SBG's consolidated statements of operations.

Investments accounted for utilizing the measurement alternative were $4 million as of September 30, 2024. SBG recorded a $6 million impairment related to one investment for the nine months ended September 30, 2023, which is reflected in other income (expense), net in SBG's consolidated statements of operations.

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

3. NOTES PAYABLE, FINANCE LEASES, AND COMMERCIAL BANK FINANCING:

Bank Credit Agreement and Notes

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. The portions of the Term Loan B-2 purchased were canceled immediately following their acquisition. STG recognized a gain on extinguishment of the Term Loan B-2 of $1 million for the nine months ended September 30, 2024.

Finance Leases to Affiliates

The current portion of notes payable, finance leases, and commercial bank financing in SBG's consolidated balance sheets includes finance leases to affiliates of $3 million and $2 million as of September 30, 2024 and December 31, 2023, respectively. Notes payable, finance leases, and commercial bank financing, less current portion, in SBG's consolidated balance sheets includes finances leases to affiliates of $9 million and $5 million as of September 30, 2024 and December 31, 2023, respectively. See Note. 8 Related Person Transactions.

Debt of Variable Interest Entities and Guarantees of Third-Party Obligations

STG jointly, severally, unconditionally, and irrevocably guaranteed $2 million of debt of certain third parties as of both September 30, 2024 and December 31, 2023, all of which related to consolidated VIEs and is included in our consolidated balance sheets as of both September 30, 2024 and December 31, 2023. SBG has also provided a guarantee that requires SBG to provide funding to Marquee regional sports network ("Marquee") if Marquee's free cash flow generated in the applicable year and its existing cash balance are insufficient to allow Marquee to make certain payments under certain of Marquee's agreements with affiliates of the Chicago Cubs, an affiliate of which is also a co-owner of Marquee. The funding obligation under the guarantee is subject to a maximum annual amount of $117 million with annual escalations of 4% for the next five years. SBG has determined that, as of September 30, 2024, it is not probable that SBG would have to perform under any of these guarantees. See Note 5. Commitments and Contingencies for additional information.

Interest Rate Swap

SBG entered into an interest rate swap effective February 7, 2023 and terminating on February 28, 2026 in order to manage a portion of SBG's exposure to variable interest rates. The swap agreement has a notional amount of $600 million, bears a fixed interest rate of 3.9%, and SBG receives a floating rate of interest based on SOFR. See Hedge Accounting within Note 1. Nature of Operations and Summary of Significant Accounting Policies for further discussion. As of September 30, 2024 and December 31, 2023, the fair value of the interest rate swap was a liability of $3 million and an asset of $1 million, respectively, which are recorded in other current liabilities and other assets, respectively, in SBG's consolidated balance sheets.

4. REDEEMABLE NONCONTROLLING INTERESTS:

SBG accounts for redeemable noncontrolling interests in accordance with ASC 480, Distinguishing Liabilities from Equity, and classifies them as mezzanine equity in SBG's consolidated balance sheets because their possible redemption is outside of the control of SBG. SBG's redeemable non-controlling interests previously consisted of the following:

Redeemable Subsidiary Preferred Equity . On August 23, 2019, Diamond Sports Holdings LLC ("DSH"), an indirect parent of Diamond Sports Group, LLC ("DSG") and indirect wholly-owned subsidiary of SBG, issued preferred equity (the "Redeemable Subsidiary Preferred Equity").

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

On February 10, 2023, SBG purchased the remaining 175,000 units of the Redeemable Subsidiary Preferred Equity for an aggregate purchase price of $190 million, representing 95% of the sum of the remaining unreturned capital contribution of $175 million, and accrued and unpaid distributions up to, but not including, the date of purchase.

Distributions accrued for the nine months ended September 30, 2023 were $3 million which are reflected in net loss attributable to the redeemable noncontrolling interests in SBG's consolidated statements of operations. Distributions accrued for the nine months ended September 30, 2023 were paid-in-kind and added to the liquidation preference, which was partially offset by certain required cash tax distributions.

5. COMMITMENTS AND CONTINGENCIES:

Litigation, Claims, and Regulatory Matters

SBG is a party to lawsuits, claims, and regulatory matters from time to time in the ordinary course of business. Actions currently pending are in various stages and no material judgments or decisions have been rendered by hearing boards or courts in connection with such actions. Except as noted below, SBG does not believe the outcome of these matters, individually or in the aggregate, will have a material effect on SBG's financial statements.

FCC Matters

On September 2, 2020, the FCC adopted a Memorandum Opinion and Order and NAL against the licensees of several stations with whom the Company has LMAs, JSAs, and/or SSAs in response to a complaint regarding those stations' retransmission consent negotiations. The NAL proposed a $0.5 million penalty for each station, totaling $9 million. The licensees filed a response to the NAL on October 15, 2020, asking the FCC to dismiss the proceeding or, alternatively, to reduce the proposed forfeiture to $25,000 per station. On July 28, 2021, the FCC issued a forfeiture order in which the $0.5 million penalty was upheld for all but one station. A Petition for Reconsideration of the forfeiture order was filed on August 7, 2021. On March 14, 2022, the FCC released a Memorandum Opinion and Order and Order on Reconsideration, which reaffirmed the forfeiture order, dismissed (and in the alternative, denied) the Petition for Reconsideration, and stated that because the fines were not paid within the period stated in the July 2021 forfeiture order the FCC may refer the case to the U.S. Department of Justice ("DOJ") for enforcement of the forfeiture pursuant to Section 504 of the Communications Act. Our understanding is that enforcement remains pending. The Company is not a party to this forfeiture order; however, SBG's consolidated financial statements include an accrual of additional expenses of $8 million for the above legal matters during the year ended December 31, 2021, as SBG consolidates these stations as VIEs.

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

On September 21, 2022, the FCC released an NAL against the licensees of a number of stations, including 83 SBG stations and several stations with whom SBG has LMAs, JSAs, and/or SSAs, for violation of the FCC's limitations on commercial matter in children's television programming related to KidsClick network programming distributed by the Company in 2018. The NAL proposed a fine of $2.7 million against SBG, and fines ranging from $20,000 to $26,000 per station for the other licensees, including the LMA, JSA, and/or SSA stations, for a total of $3.4 million. As of September 30, 2024, SBG has accrued $3.4 million. On October 21, 2022, the Company filed a written response seeking reduction of the proposed fine amount. On September 6, 2024, the FCC denied the Company's request for reduction of the fine (and similar requests filed by certain other licensees) and issued a forfeiture order imposing the fine as proposed in the NAL. The Company and all other affected licensees filed a joint petition for reconsideration of the forfeiture order on October 7, 2024 and the matter remains pending.

Other Matters

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

On March 1, 2024, the court approved a global settlement and release of all claims associated with the Diamond Litigation, which settlement included an amendment to the MSA. Sinclair entered into the settlement, without admitting any fault or wrongdoing. The settlement terms included, among other things, DSG's dismissal with prejudice of its $1.5 billion litigation against Sinclair and all other defendants, along with the full and final satisfaction and release of all claims in that litigation against all defendants, including Sinclair and its subsidiaries, in exchange for 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. During the first quarter of 2024, SBG paid $50 million related to the settlement. The final settlement payment was made during the second quarter of 2024 and of the total $495 million settlement amount paid, $347 million was paid by STG and $148 million was paid by Ventures.

As described under Note 3. Notes Payable, Finance Leases, and Commercial Bank Financing, SBG has provided a guarantee that requires SBG to provide funding to Marquee under certain circumstances. On July 19, 2024, Marquee sent SBG a funding notice seeking $29 million under the Marquee guarantee by August 1, 2024 purportedly to make payments under certain agreements to affiliates of the Chicago Cubs, an affiliate of which is also a co-owner of Marquee. Based on the information provided to SBG by Marquee, Marquee has sufficient cash to make such payments without funding under the Marquee guarantee. For this and other reasons, SBG does not believe it is contractually required to provide funding under the Marquee guarantee at this time and have so informed Marquee. On August 2, 2024, Marquee sent SBG another letter claiming that SBG's failure to timely pay the amounts subject to Marquee's funding notice constitutes a breach of the Marquee guarantee and requesting payment of such amounts no later than August 17, 2024 at which time Marquee has stated it will pursue any and all available remedies pursuant to the Marquee guarantee. This dispute may result in litigation, and based on SBG's expectation of Marquee's claims, SBG believes that it has meritorious defenses and intends to vigorously defend against such claims.

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

6. SEGMENT DATA:

SBG measures segment performance based on operating income (loss). For the quarter ended September 30, 2024, SBG had one reportable segment: local media. The local media segment includes SBG's television stations, original networks, and content and provides these through free over-the-air programming to television viewing audiences for stations in markets located throughout the continental United States, as well as distributes the content of these stations to MVPDs for distribution to their customers in exchange for contractual fees. See Revenue Recognition under Note 1. Nature of Operations and Summary of Significant Accounting Policies for further detail. Other and corporate are not reportable segments but are included for reconciliation purposes. Other primarily consists of tennis, non-broadcast digital and internet solutions, technical services, and non-media investments. Corporate costs primarily include SBG's costs to operate as the parent company of its subsidiaries. All of SBG's businesses are located within the United States. The businesses included in other were transferred to Ventures as part of the Reorganization discussed within Company Reorganization under Note 1. Nature of Operations and Summary of Significant Accounting Policies.

Segment financial information is included in the following tables for the periods presented (in millions):


As of September 30, 2024	Local Media		Corporate		Consolidated
Assets	$	4,547	$	66	$	4,613


For the three months ended September 30, 2024	Local Media		Corporate		Consolidated
Revenue	$	845	$	—	$	845
Depreciation of property and equipment and amortization of definite-lived intangibles and other assets	58		—		58
Amortization of program costs	18		—		18
Corporate general and administrative expenses	24		—		24

Gain on asset dispositions and other, net of impairment	(11)		—		(11)
Operating income	182		—		182
Interest expense including amortization of debt discount and deferred financing costs	78		—		78

For the nine months ended September 30, 2024	Local Media		Corporate		Consolidated
Revenue	$	2,322	$	—	2,322
Depreciation of property and equipment and amortization of definite-lived intangibles and other assets	174		—		174
Amortization of program costs	55		—		55
Corporate general and administrative expenses	94		6		100

Gain on asset dispositions and other, net of impairment	(11)		—		(11)
Operating income (loss)	306		(6)		300
Interest expense including amortization of debt discount and deferred financing costs	230		—		230


For the three months ended September 30, 2023	Local Media		Corporate		Consolidated
Revenue	$	697	$	—	$	697
Depreciation of property and equipment and amortization of definite-lived intangibles and other assets	59		—		59
Amortization of program costs	18		—		18
Corporate general and administrative expenses	31		—		31
Loss on deconsolidation of subsidiary	—		10		10
Gain on asset dispositions and other, net of impairment	(2)		(1)		(3)
Operating income (loss)	53		(9)		44
Interest expense including amortization of debt discount and deferred financing costs	77		—		77

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


For the nine months ended September 30, 2023	Local Media		Other & Corporate (a)		Eliminations			Consolidated
Revenue	$	2,101	$	119	$	(7)	(b)	$	2,213
Depreciation of property and equipment and amortization of definite-lived intangibles and other assets	185		10		(1)			194
Amortization of program costs	59		—		—			59
Corporate general and administrative expenses	109		38		—			147
Loss on deconsolidation of subsidiary	—		10		—			10
(Gain) loss on asset dispositions and other, net of impairment	(5)		12		—			7
Operating income (loss)	116		(47)		—			69
Interest expense including amortization of debt discount and deferred financing costs	227		—		—			227
Income from equity method investments	—		31		—			31

(a)Represents the activity in tennis, non-broadcast digital and internet solutions, technical services, and non-media investments (collectively, other) prior to the Reorganization on June 1, 2023 and the activity in corporate prior and subsequent to the Reorganization. See Company Reorganization within Note 1. Nature of Operations and Summary of Significant Accounting Policies.

(b)Includes $1 million for the nine months ended September 30, 2023 of revenue for services provided by local media to other, which is eliminated in consolidation.

7. VARIABLE INTEREST ENTITIES:

Certain of SBG's stations provide services to other station owners within the same respective market through agreements, such as LMAs, where SBG provides programming, sales, operational, and administrative services, and JSAs and SSAs, where SBG provides non-programming, sales, operational, and administrative services. In certain cases, SBG has also entered into purchase agreements or options to purchase the license related assets of the licensee. SBG typically owns the majority of the non-license assets of the stations, and in some cases where the licensee acquired the license assets concurrent with SBG's acquisition of the non-license assets of the station, SBG has provided guarantees to the bank for the licensee's acquisition financing. The terms of the agreements vary, but generally have initial terms of over five years with several optional renewal terms. Based on the terms of the agreements and the significance of SBG's investment in the stations, SBG is the primary beneficiary when, subject to the ultimate control of the licensees, SBG has the power to direct the activities which significantly impact the economic performance of the VIE through the services SBG provides and SBG absorbs losses and returns that would be considered significant to the VIEs. The fees paid between SBG and the licensees pursuant to these arrangements are eliminated in consolidation.

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The carrying amounts and classification of the assets and liabilities of the VIEs mentioned above, which have been included in SBG's consolidated balance sheets as of the dates presented, were as follows (in millions):


	As of September 30, 2024		As of December 31, 2023
ASSETS
Current assets:


Accounts receivable, net	$	20	$	23
Other current assets	4		3
Total current assets	24		26


Property and equipment, net	9		11

Goodwill and indefinite-lived intangible assets	15		15
Definite-lived intangible assets, net	28		33

Total assets	$	76	$	85

LIABILITIES
Current liabilities:
Other current liabilities	$	15	$	14


Notes payable, finance leases and commercial bank financing, less current portion	5		6


Other long-term liabilities	3		3
Total liabilities	$	23	$	23

The amounts above represent the combined assets and liabilities of the VIEs described above, for which SBG is the primary beneficiary. Total liabilities associated with certain outsourcing agreements and purchase options with certain VIEs, which are excluded from the above, were $129 million as of September 30, 2024 and $130 million as of December 31, 2023, as these amounts are eliminated in consolidation. The assets of each of these consolidated VIEs can only be used to settle the obligations of the VIE. As of September 30, 2024, all of the liabilities are non-recourse to SBG except for the debt of certain VIEs. See Debt of variable interest entities and guarantees of third-party obligations under Note 3. Notes Payable, Finance Leases, and Commercial Bank Financing for further discussion. The risk and reward characteristics of the VIEs are similar.

Other VIEs

Prior to the Reorganization, SBG had several investments in entities which are considered VIEs. However, SBG did not participate in the management of these entities, including the day-to-day operating decisions or other decisions which would allow SBG to control the entity, and therefore, SBG was not considered the primary beneficiary of these VIEs. SBG's investments in these VIEs for which SBG was not the primary beneficiary were transferred to Ventures as part of the Reorganization. The income and loss related to equity method investments and other investments are recorded in income from equity method investments and other income (expense), net, respectively, in SBG's consolidated statements of operations. SBG recorded a gain of $37 million for the nine months ended September 30, 2023 related to these investments.

SBG holds substantially all of the equity of DSIH and provides certain management and general and administrative services to subsidiaries of DSIH. However, it was determined that SBG is not the primary beneficiary because SBG lacks the ability to control the activities that most significantly drive the economics of the business. The carrying amount of SBG's investment in DSIH is zero and there is no obligation for SBG to provide additional financial support.

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

8. RELATED PERSON TRANSACTIONS:

Transactions With SBG's Indirect Controlling Shareholders

David, Frederick, J. Duncan, and Robert Smith (collectively, the "Sinclair controlling shareholders") are brothers and hold substantially all of the Sinclair Class B Common Stock and some of the Sinclair Class A Common Stock and, subsequent to the Reorganization, the Sinclair controlling shareholders are on the Board of Managers of SBG. SBG engaged in the following transactions with them and/or entities in which they have substantial interests:

Leases. Certain assets used by SBG and SBG's operating subsidiaries are leased from entities owned by the Sinclair controlling shareholders. Lease payments made to these entities were $2 million and $5 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. For further information, see Note 3. Notes Payable, Finance Leases, and Commercial Bank Financing.

Charter Aircraft. SBG leases aircraft owned by certain Sinclair controlling shareholders. For all leases, SBG incurred expenses of less than $0.1 million and $0.1 million for the three and nine months ended September 30, 2024, respectively, and $0.2 million for the nine months ended September 30, 2023.

Cunningham Broadcasting Corporation

Cunningham owns a portfolio of television stations, including: WNUV-TV Baltimore, Maryland; WRGT-TV Dayton, Ohio; WVAH-TV Charleston, West Virginia; WMYA-TV Anderson, South Carolina; WTTE-TV Columbus, Ohio; WDBB-TV Birmingham, Alabama; WBSF-TV Flint, Michigan; WGTU-TV/WGTQ-TV Traverse City/Cadillac, Michigan; WEMT-TV Tri-Cities, Tennessee; WYDO-TV Greenville, North Carolina; KBVU-TV/KCVU-TV Eureka/Chico-Redding, California; WPFO-TV Portland, Maine; KRNV-DT/KENV-DT Reno, Nevada/Salt Lake City, Utah; and KTXD-TV in Dallas, Texas (collectively, the "Cunningham Stations"). Certain of SBG's stations provide services to the Cunningham Stations pursuant to LMAs or JSAs and SSAs. See Note 7. Variable Interest Entities, for further discussion of the scope of services provided under these types of arrangements.

All of the non-voting stock of the Cunningham Stations is owned by trusts for the benefit of the children of the Sinclair controlling shareholders. SBG consolidates certain subsidiaries of Cunningham with which SBG has variable interests through various arrangements related to the Cunningham Stations.

The services provided to WNUV-TV, WMYA-TV, WTTE-TV, WRGT-TV and WVAH-TV are governed by a master agreement which has a current term that expires on July 1, 2028 and there is one additional five-year renewal term remaining with final expiration on July 1, 2033. SBG also executed purchase agreements to acquire the license related assets of these stations from Cunningham, which grant SBG the right to acquire, and grant Cunningham the right to require SBG to acquire, subject to applicable FCC rules and regulations, 100% of the capital stock or the assets of these individual subsidiaries of Cunningham. Pursuant to the terms of this agreement SBG is obligated to pay Cunningham an annual fee for the television stations equal to the greater of (i) 3% of each station's annual net broadcast revenue or (ii) $6 million. The aggregate purchase price of these television stations increases by 6% annually. A portion of the fee is required to be applied to the purchase price to the extent of the 6% increase. The cumulative prepayments made under these purchase agreements were $68 million and $65 million as of September 30, 2024 and December 31, 2023, respectively. The remaining aggregate purchase price of these stations, net of prepayments, as of both September 30, 2024 and December 31, 2023, was approximately $54 million. Additionally, SBG provides services to WDBB-TV pursuant to an LMA, which expires April 22, 2025, and has a purchase option to acquire for $0.2 million. SBG paid Cunningham, under these agreements, $3 million and $9 million for the three and nine months ended September 30, 2024, respectively, and $3 million and $9 million for the three and nine months ended September 30, 2023, respectively.

As SBG consolidates the licensees as VIEs, the amounts SBG earns or pays under the arrangements are eliminated in consolidation and the gross revenues of the stations are reported in SBG's consolidated statements of operations. SBG's consolidated revenues include $41 million and $109 million for the three and nine months ended September 30, 2024, respectively, and $33 million and $102 million for the three and nine months ended September 30, 2023, respectively, related to the Cunningham Stations.

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

SBG has an agreement with Cunningham to provide master control equipment and provide master control services to a station in Johnstown, PA with which Cunningham has an LMA that expires in June 2025. Under the agreement, Cunningham paid SBG an initial fee of $1 million and pays SBG $0.3 million annually for master control services plus the cost to maintain and repair the equipment. In addition, SBG has an agreement with Cunningham to provide a news share service with the Johnstown, PA station for an annual fee of $0.6 million, which increases by 3% on each anniversary and expires in November 2025.

SBG has multi-cast agreements with Cunningham Stations in the Eureka/Chico-Redding, California; Tri-Cities, Tennessee; Anderson, South Carolina; Baltimore, Maryland; Portland, Maine; Charleston, West Virginia; Dallas, Texas; and Greenville, North Carolina markets. In exchange for carriage of these networks in their markets, SBG paid $0.2 million and $1.2 million for the three and nine months ended September 30, 2024, respectively, and $0.5 million and $1.5 million for the three and nine months ended September 30, 2023, respectively, under these agreements.

Leased Property by Real Estate Ventures

Certain of SBG's real estate ventures entered into leases with entities owned by members of the Smith Family. Total rent payments received under these leases were $0.7 million for the nine months ended September 30, 2023.

Sinclair, Inc.

Subsequent to the Reorganization, Sinclair is the sole member of SBG. See Company Reorganization within Note 1. Nature of Operations and Summary of Significant Accounting Policies for further discussion.

SBG recorded revenue of $3 million and $8 million for the three and nine months ended September 30, 2024, respectively, and $2 million and $3 million for the three and nine months ended September 30, 2023, respectively, within the local media segment related to sales services provided by SBG to Sinclair, and certain of its direct and indirect subsidiaries.

SBG recorded expenses of $4 million and $9 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, within the local media segment related to digital advertising services provided by Sinclair, and certain of its direct and indirect subsidiaries, to SBG.

SBG made net cash distributions of $85 million and $13 million to Sinclair, and certain of its direct and indirect subsidiaries, for the three and nine months ended September 30, 2024, respectively. SBG made net cash distributions of $67 million and $427 million to Sinclair, and certain of its direct and indirect subsidiaries, for the three and nine months ended September 30, 2023, respectively.

As of September 30, 2024, SBG had a receivable from Sinclair, and certain of its direct and indirect subsidiaries, of $1 million, included within prepaid expenses and other current assets in SBG's consolidated balance sheets, and as of December 31, 2023, SBG had a receivable from Sinclair, and certain of its direct and indirect subsidiaries, of $3 million, included within prepaid expenses and other current assets in SBG's consolidated balance sheets.

Diamond Sports Intermediate Holdings LLC

SBG's equity interest in DSIH is accounted for as an equity method investment.

Management Services Agreement. SBG has a management services agreement with DSG, a wholly-owned subsidiary of DSIH, in which SBG provides DSG with affiliate sales and marketing services and general and administrative services. Pursuant to this agreement, SBG recorded $18 million and $48 million of revenue for the three and nine months ended September 30, 2024, respectively, and $14 million and $36 million of revenue for the three and nine months ended September 30, 2023, respectively.

Note receivable. SBG received payments of $203 million from DSPV for the nine months ended September 30, 2023 related to the note receivable associated with the A/R Facility. The loans under the A/R Facility were transferred to Ventures as part of the Reorganization. The A/R Facility was terminated on March 14, 2024.

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

SBG recorded revenue of $1 million and $3 million for the three and nine months ended September 30, 2024, respectively, and $1 million and $10 million for the three and nine months ended September 30, 2023, respectively, within the local media segment and other related to certain other transactions between DSIH and SBG.

Employees

Jason Smith, an employee of SBG, is the son of Frederick Smith, who is a Vice President of SBG and a member of SBG's Board of Managers. Jason Smith received total compensation of $0.3 million and $0.2 million for the three months ended September 30, 2024 and 2023, respectively, and $0.8 million and $0.6 million for the nine months ended September 30, 2024 and 2023, respectively, consisting of salary and bonus, and was granted 37,566 shares of restricted stock, vesting over two years, and 500,000 stock appreciation rights, vesting over two years, for the nine months ended September 30, 2024.

Ethan White, an employee of SBG, is the son-in-law of J. Duncan Smith, who is a Vice President of SBG and a member of SBG's Board of Managers. Ethan White received total compensation of $0.1 million for both the three months ended September 30, 2024 and 2023 and $0.2 million for both the nine months ended September 30, 2024 and 2023, consisting of salary and bonus, and was granted 1,503 and 1,252 shares of restricted stock, vesting over two years, for the nine months ended September 30, 2024 and 2023, respectively.

Amberly Thompson, an employee of SBG, is the daughter of Donald Thompson, who is an Executive Vice President and Chief Human Resources Officer of SBG. Amberly Thompson received total compensation of less than $0.1 million for both the three months ended September 30, 2024 and 2023 and $0.1 million for both the nine months ended September 30, 2024 and 2023, consisting of salary and bonus.

Frederick Smith is the brother of David Smith, Executive Chairman of SBG and a member of SBG's Board of Managers; Robert Smith, a member of SBG's Board of Managers; and J. Duncan Smith. Frederick Smith received total compensation of $0.2 million for both the three months ended September 30, 2024 and 2023 and $0.6 million for both the nine months ended September 30, 2024 and 2023, consisting of salary and bonus.

9. FAIR VALUE MEASUREMENTS:

•Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.

•Level 3: Unobservable inputs that reflect the reporting entity's own assumptions.

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SINCLAIR BROADCAST GROUP, LLC

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The following table sets forth the face value and fair value of SBG's financial assets and liabilities for the periods presented (in millions):


	As of September 30, 2024				As of December 31, 2023
	Face Value		Fair Value		Face Value		Fair Value
Level 1:
Money market funds	N/A		$	116	N/A		$	309

Level 2:
Interest rate swap (a)	N/A		$	3	N/A		$	1
STG (b):
5.500% Senior Notes due 2030	$	485	$	350	$	485	$	362
5.125% Senior Notes due 2027	$	274	$	238	$	274	$	248
4.125% Senior Secured Notes due 2030	$	737	$	574	$	737	$	521
Term Loan B-2, due September 30, 2026	$	1,178	$	1,116	$	1,215	$	1,124
Term Loan B-3, due April 1, 2028	$	716	$	530	$	722	$	595
Term Loan B-4, due April 21, 2029	$	733	$	543	$	739	$	602

Debt of variable interest entities (b)	$	7	$	7	$	7	$	7

N/A - Not applicable

(a)SBG entered into an interest rate swap effective February 7, 2023 and terminating on February 28, 2026 in order to manage a portion of SBG's exposure to variable interest rates. The swap agreement has a notional amount of $600 million, bears a fixed interest rate of 3.9%, and SBG receives a floating rate of interest based on SOFR. The fair value of the interest rate swap was a liability as of September 30, 2024 and an asset as of December 31, 2023. See Hedge Accounting within Note 1. Nature of Operations and Summary of Significant Accounting Policies and Interest Rate Swap within Note 3. Notes Payable, Finance Leases, and Commercial Bank Financing.

(b)Amounts are carried in SBG's consolidated balance sheets net of debt discount, premium, and deferred financing cost, which are excluded in the above table, of $38 million and $46 million as of September 30, 2024 and December 31, 2023, respectively.

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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 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.

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 nine months ended September 30, 2024.

SUMMARY OF SIGNIFICANT EVENTS

Content and Distribution

•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

•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.

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NextGen Broadcast (ATSC 3.0)

•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. This brings the total number of our markets in which NextGen TV has been deployed to 45:

Month

Market

Number of Stations

Company Stations

April 2024

Portland, ME

WGME (CBS), WPFO(a) (FOX)

June 2024

Myrtle Beach, SC

WPDE (ABC)

(a)The license and programming assets for this station are currently owned by a third party. SBG provides certain non-programming related sales, operational, and administrative services to this station pursuant to a service agreement, such as a JSA and SSA.

Financing, Capital Allocation, and Shareholder Returns

•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.

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SINCLAIR, INC. RESULTS OF OPERATIONS

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

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 September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Media revenues	$	908	$	758	$	2,519	$	2,285
Non-media revenues	9		9		25		23
Total revenues	917		767		2,544		2,308
Media programming and production expenses	414		400		1,247		1,211
Media selling, general and administrative expenses	201		176		591		557
Depreciation and amortization expenses	63		66		189		204
Amortization of program costs	18		18		55		59
Non-media expenses	14		15		39		36
Corporate general and administrative expenses	41		45		149		165

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	$	94	$	(46)	$	134	$	50

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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 September 30,				Percent Change Increase / (Decrease)	Nine Months Ended September 30,				Percent Change Increase / (Decrease)
	2024		2023			2024		2023
Revenue:
Distribution revenue	$	383	$	365	5%	$	1,151	$	1,118	3%
Core advertising revenue	283		281		1%	852		861		(1)%
Political advertising revenue	138		11		n/m	202		20		n/m
Other media revenues	41		40		2%	117		102		15%
Media revenues (a)	$	845	$	697	21%	$	2,322	$	2,101	11%

Operating Expenses:
Media programming and production expenses	384		371		4%	1,149		1,111		3%
Media selling, general and administrative expenses (b)	188		164		15%	549		514		7%
Depreciation and amortization expenses	58		59		(2)%	174		185		(6)%
Amortization of program costs	18		18		—%	55		59		(7)%
Corporate general and administrative expenses	24		31		(23)%	94		109		(14)%
Non-media expenses	2		3		(33)%	6		12		(50)%
Gain on asset dispositions and other, net of impairment	(11)		(2)		n/m	(11)		(5)		n/m
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%
Gain on extinguishment of debt	$	—	$	4	n/m	$	1	$	15	(93)%
Other income, net	$	2	$	6	(67)%	$	35	$	40	(13)%

n/m - not meaningful

(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.

Revenue

Distribution revenue. 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 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 $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.

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SINCLAIR, INC. RESULTS OF OPERATIONS

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 September 30,		Nine Months Ended September 30,
	2024	2023	2024	2023
Syndicated/Other programming	35%	39%	38%	39%
Local news	31%	31%	31%	30%
Network programming	17%	15%	17%	16%
Sports programming	15%	10%	12%	11%
Paid programming	2%	5%	2%	4%

The following table sets forth our affiliate percentages of advertising revenue for the periods presented:


		Percent of Advertising Revenue for the
		Three Months Ended September 30,		Nine Months Ended September 30,
	# of Channels	2024	2023	2024	2023
ABC	40	28%	30%	25%	30%
FOX	55	22%	23%	22%	23%
CBS	30	20%	19%	20%	20%
NBC	25	16%	13%	20%	12%
CW	47	5%	5%	5%	5%
MNT	39	3%	4%	3%	4%
Other	402	6%	6%	5%	6%
Total	638

Expenses

Media programming and production expenses. 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 $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 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.

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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 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 September 30,				Percent Change Increase / (Decrease)	Nine Months Ended September 30,				Percent Change Increase / (Decrease)
	2024		2023			2024		2023
Revenue:
Distribution revenue	$	51	$	49	4%	$	154	$	140	10%
Core advertising revenue	8		9		(11)%	32		32		—%
Other media revenues	1		1		—%	4		2		n/m
Media revenues	60		59		2%	190		174		9%

Operating Expenses:
Media programming and production expenses	30		29		3%	98		91		8%
Media selling, general and administrative expenses (a)	13		11		18%	42		33		27%
Depreciation and amortization expenses	5		5		—%	16		15		7%

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 $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.

Revenue

Distribution revenue. 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 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.

Expenses

Media programming and production expenses. 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.

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SINCLAIR, INC. RESULTS OF OPERATIONS

Media selling, general and administrative expenses. 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. See explanation under Corporate and Unallocated Expenses.

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 September 30,				Percent Change Increase / (Decrease)	Nine Months Ended September 30,				Percent Change Increase/(Decrease)
	2024		2023			2024		2023
Revenue:



Media revenues (a)	$	9	$	6	50%	$	24	$	21	14%
Non-media revenues (b)	$	10	$	11	(9)%	$	30	$	27	11%

Operating Expenses:
Media expenses (c)	$	6	$	5	20%	$	16	$	30	(47)%
Non-media expenses (d)	$	12	$	13	(8)%	$	36	$	26	38%



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 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.

Revenue. 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.

Expenses. 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.

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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 September 30,				Percent Change Increase/ (Decrease)	Nine Months Ended September 30,				Percent Change Increase/ (Decrease)
	2024		2023			2024		2023
Corporate general and administrative expenses	$	41	$	45	(9)%	$	149	$	165	(10)%




Income tax (provision) benefit	$	(29)	$	12	n/m	$	(30)	$	236	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 $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 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 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.

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SINCLAIR BROADCAST GROUP, LLC RESULTS OF OPERATIONS

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

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 September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Media revenues	$	845	$	697	$	2,322	$	2,203
Non-media revenues	—		—		—		10
Total revenues	845		697		2,322		2,213
Media programming and production expenses	384		371		1,149		1,166
Media selling, general and administrative expenses	188		164		549		539
Depreciation and amortization expenses	58		59		174		194
Amortization of program costs	18		18		55		59
Non-media expenses	2		3		6		22
Corporate general and administrative expenses	24		31		100		147

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
Net income (loss) attributable to SBG	$	80	$	(22)	$	87	$	62

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 nine months ended September 30, 2024 and 2023.

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SINCLAIR BROADCAST GROUP, LLC RESULTS OF OPERATIONS

Other

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,
		2023
Revenue:
Distribution revenue			$	76
Core advertising revenue			29
Other media revenues			3
Media revenues (a)			$	108
Non-media revenues (b)			$	11

Operating Expenses:
Media expenses (c)			$	86
Non-media expenses (d)			$	10

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

Income from equity method investments			$	31

(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.

Corporate and Unallocated Expenses

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


	Three Months Ended September 30,				Percent Change Increase/ (Decrease)	Nine Months Ended September 30,				Percent Change Increase/ (Decrease)
	2024		2023			2024		2023
Corporate general and administrative expenses	$	24	$	31	(23)%	$	100	$	147	(32)%



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

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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. 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.

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LIQUIDITY AND CAPITAL RESOURCES

Liquidity and Capital Resources

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 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 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. 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's, 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, and other geopolitical matters, natural disasters, and pandemics, 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 Bank 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, 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.

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 the first quarter of 2024 and the remaining $445 million was paid in the second quarter of 2024. Of the total $495 million settlement amount paid, $347 million was paid by STG and $148 million was paid by Ventures.

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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 September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
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)


Purchases of investments	(9)		(5)		(41)		(44)
Distributions and proceeds from investments	1		1		185		205


Other, net	1		2		3		6
Net cash flows (used in) from investing activities	$	(24)	$	(32)	$	86	$	97

Cash flows used in financing activities:

Repayments of notes payable, commercial bank financing, and finance leases	$	(9)	$	(38)	$	(52)	$	(76)

Dividends paid on Class A and Class B Common Stock	(16)		(16)		(49)		(50)

Repurchase of outstanding Class A Common Stock	—		—		—		(153)
Repurchase of redeemable subsidiary preferred equity	—		—		—		(190)
Distributions to noncontrolling interests, net	(3)		(2)		(8)		(10)

Other, net	—		2		(3)		(2)
Net cash flows used in financing activities	$	(28)	$	(54)	$	(112)	$	(481)

Operating Activities

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 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 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.

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LIQUIDITY AND CAPITAL RESOURCES

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.

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 September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Net cash flows from (used in) operating activities	$	226	$	50	$	(86)	$	172

Cash flows (used in) from investing activities:
Acquisition of property and equipment	$	(17)	$	(30)	$	(61)	$	(71)


Purchases of investments	(2)		—		(4)		(37)
Distributions and proceeds from investments	18		—		44		204


Other, net	(1)		2		1		6
Net cash flows (used in) from investing activities	$	(2)	$	(28)	$	(20)	$	102

Cash flows used in financing activities:

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

Dividends paid on Old Sinclair Class A and Class B Common Stock	—		—		—		(18)

Repurchase of outstanding Old Sinclair Class A Common Stock	—		—		—		(153)
Repurchase of redeemable subsidiary preferred equity	—		—		—		(190)
Distributions to noncontrolling interests, net	(3)		(3)		(8)		(10)


Contributions from (distributions to) member, net	(63)		(69)		48		(429)
Other, net	—		—		—		(3)
Net cash flows used in financing activities	$	(74)	$	(111)	$	(11)	$	(879)

Operating Activities

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 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.

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LIQUIDITY AND CAPITAL RESOURCES

Financing Activities

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

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, 2023.

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, 2023.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Each of Sinclair's and SBG's management, under the supervision and with the participation of its respective Chief Executive Officer and Chief Financial Officer, evaluated the design and effectiveness of its disclosure controls and procedures as of September 30, 2024.

The term "disclosure controls and procedures," as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to provide reasonable assurance that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to provide reasonable assurance that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including its principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Assessment of Effectiveness of Disclosure Controls and Procedures

Based on the evaluation of its disclosure controls and procedures as of September 30, 2024, each of Sinclair's and SBG's Chief Executive Officer and Chief Financial Officer concluded that, as of such date, Sinclair's and SBG's disclosure controls and procedures, respectively, were effective at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

There have been no changes in either Sinclair's or SBG's internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended September 30, 2024, that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.

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Limitations on the Effectiveness of Controls

Management, including each of Sinclair's and SBG's Chief Executive Officer and Chief Financial Officer, do not expect that Sinclair's and SBG's disclosure controls and procedures or its internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within each company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management's override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Sinclair and SBG are party to lawsuits and claims from time to time in the ordinary course of business. Actions currently pending are in various stages and no material judgments or decisions have been rendered by hearing boards or courts in connection with such actions.

See Litigation, Claims, and Regulatory Matters under Note 5. Commitments and Contingencies within Sinclair's Consolidated Financial Statements for discussion related to certain pending lawsuits.

See Litigation, Claims, and Regulatory Matters under Note 5. Commitments and Contingencies within SBG's Consolidated Financial Statements for discussion related to certain pending lawsuits.

ITEM 1A. RISK FACTORS

As of the date of this report, there have been no material changes to the risk factors we previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

None.

ITEM 5. OTHER INFORMATION

During the three months ended September 30, 2024, none of Sinclair's or SBG's directors, managers, or officers, as applicable, adopted or terminated any contract, instruction, or written plan for the purchase or sale of Sinclair's securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any "non-Rule 10b5-1 trading arrangement."

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ITEM 6. EXHIBITS


Exhibit Number						Description
10.1†						Second Amended and Restated Employment Agreement among Sinclair, Inc., Sinclair Broadcast Group, LLC, and Christopher S. Ripley dated August 8, 2024.
31.1						Certification by Christopher S. Ripley, as Chief Executive Officer of Sinclair, Inc., pursuant to Rule 13a-14(a) of the Exchange Act (15 U.S.C. § 7241).
31.2						Certification by Lucy Rutishauser, as Chief Financial Officer of Sinclair, Inc., pursuant to Rule 13a-14(a) of the Exchange Act (15 U.S.C. § 7241).
31.3						Certification by Christopher S. Ripley, as Chief Executive Officer of Sinclair Broadcast Group, LLC, pursuant to Rule 13a-14(a) of the Exchange Act (15 U.S.C. § 7241).
31.4						Certification by Lucy Rutishauser, as Chief Financial Officer of Sinclair Broadcast Group, LLC, pursuant to Rule 13a-14(a) of the Exchange Act (15 U.S.C. § 7241).
32.1**						Certification by Christopher S. Ripley, as Chief Executive Officer of Sinclair, Inc., pursuant to Rule 13a-14(b) of the Exchange Act and § 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C § 1350).
32.2**						Certification by Lucy Rutishauser, as Chief Financial Officer of Sinclair, Inc., pursuant to Rule 13a-14(b) of the Exchange Act and § 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C § 1350).
32.3**						Certification by Christopher S. Ripley, as Chief Executive Officer of Sinclair Broadcast Group, LLC, pursuant to Rule 13a-14(b) of the Exchange Act and § 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C § 1350).
32.4**						Certification by Lucy Rutishauser, as Chief Financial Officer of Sinclair Broadcast Group, LLC, pursuant to Rule 13a-14(b) of the Exchange Act and § 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C § 1350).
101†						The Company's Consolidated Financial Statements and related Notes for the quarter ended September 30, 2024 from this Quarterly Report on Form 10-Q, formatted in iXBRL (Inline eXtensible Business Reporting Language).
104						Cover Page Interactive Data File (included in Exhibit 101).

† Filed herewith.

** In accordance with Item 601(b)(32) of Regulation S-K, this Exhibit is not deemed "filed" for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section. Such certifications will not be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, each Registrant has duly caused this report on Form 10-Q to be signed on its behalf by the undersigned thereunto duly authorized on the 8th day of November 2024.


			SINCLAIR, INC.
			SINCLAIR BROADCAST GROUP, LLC

			By:			/s/ David R. Bochenek
						David R. Bochenek
						Senior Vice President/Chief Accounting Officer
						(Authorized Officer and Chief Accounting Officer)

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Sinclair 10-Q2024 Q3 Quarterly report

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