シンクレア（SBGI）2026年第3四半期決算説明会：政治関連収入がガイダンス上方修正を牽引

Sinclair, Inc.（NASDAQ: SBGI）は、記録的な政治広告需要と規律あるコスト管理が牽引し、2026年第3四半期の売上高および調整後EBITDAが増加したと発表しました。経営陣は通期の売上高、調整後EBITDA、および政治広告の見通しを引き上げました。

主なポイント

• 第3四半期の売上高は前年同期比16%増の8億9,300万ドルとなり、調整後EBITDAは同113%増の2億1,300万ドルに増加しました。
• 政治広告収入は、比較対象となる2022年の中間選挙四半期から55%増の1億3,600万ドルに達しました。シンクレアは現在、2026年通期の政治広告収入を約4億5,500万ドルと予想しており、前回のガイダンス（少なくとも3億7,500万ドル）を上回っています。
• ローカル・メディア部門の売上高は18%増の7億8,900万ドル、同部門の調整後EBITDAは123%増の2億500万ドルとなりました。
• コア広告収入は4%減少しました。これは政治広告による締め出し効果や、複数の消費者向け業種における慎重な支出を反映したものです。
• Sinclair Television Groupの純レバレッジ倍率は前四半期の5.2倍、前年同期の6.0倍から5.1倍に低下しました。年初来の債務返済および償還額は合計約3億5,500万ドルに達しました。
• 経営陣はVenturesポートフォリオを単体で分離しないことを決定しましたが、より規模の大きい放送事業の統合に伴うスピンオフと合併（スピン・マージ）については引き続き検討しています。

主な財務データ

事業および営業業績

政治広告が主な成長ドライバーとなりました。シンクレアは2026年の政治広告収入を約4億5,500万ドルと予想しており、これは2024年の大統領選挙サイクルから12%増、2022年の中間選挙サイクルから37%増に相当します。経営陣によると、政治広告支出の38%が政党および候補者によるもので、62%が争点広告および政治活動委員会（PAC）によるものでした。

ディストリビューション収入は、提携放送局の出資分と解約率（チャーン）の鈍化に支えられ、1%増加しました。経営陣は、全体の解約率は1桁台半ばにとどまっており、チャーターおよびディレクTVが主導する形で従来のディストリビューターにおける改善が見られたと述べています。

コア広告は政治広告需要が商業用広告枠を圧迫したため、4%減少しました。自動車関連広告は第3四半期に安定して推移したものの、第4四半期に入るとやや減少傾向にありました。また、コスト高や広告主の予算削減の圧力を受けて、医療、法律、食品関連の広告にも弱さが見られたと経営陣は指摘しました。

テニス・チャンネルのコア広告収入は21%増加し、ディストリビューション収入は直接販売（DTC）顧客の継続的な成長により2%増加しました。調整後EBITDAは、番組制作・放映権コストの上昇およびDTCプラットフォームへの継続的な投資により、約100万ドル減少して1,500万ドルとなりました。

シンクレアはまた、テニス・チャンネル、テニス・チャンネル2、およびデジタルプラットフォーム全体での視聴者数と配信の拡大を強調しました。12月には自社開発の新しいアプリのリリースが予定されており、経営陣はストリーミング加入者の拡大が事業における最大の増分機会であると考えています。

経営陣による業績予想（ガイダンス）

設備投資、支払利息（純額）、純現金支払税金のガイダンスに変更はありません。シンクレアは、2月下旬の第4四半期決算発表時に2027年通期のガイダンスを提示する予定です。

2027年について、経営陣は政治広告枠がコア広告主に還元される一方で、デジタル・クロスプラットフォームやポッドキャスト事業が引き続き成長すると述べています。ただし、同社にはオリンピックやワールドカップによる広告面での恩恵がなく、MLBのシーズンに関しても不透明感が残っています。設備投資額は、概ね2026年の水準と同程度となる見込みです。

リスクと注視すべきポイント

• コア広告は引き続き、マクロ経済の不透明感、燃料価格の高騰、消費者向け分野におけるコスト圧力に晒されています。
• 2026年には政治広告が一部のコア需要を圧迫したため、シンクレアは選挙サイクルの終了後に広告主を呼び戻す必要があります。
• オリンピックやワールドカップが開催されないため、2027年の広告収入の比較ハードルはより高くなります。
• 継続中のMLBの労使交渉はスポーツ関連広告に不透明感をもたらしていますが、経営陣はシンクレアの配信契約には特定のMLB試合数の放送・配信義務は含まれていないと説明しています。
• 仮想MVPD（vMVPD）の成長は鈍化していますが、経営陣はそれらのプラットフォームが引き続き加入者を増やしていると述べています。
• テニス・チャンネルは引き続き投資フェーズにあり、コンテンツ、テクノロジー、マーケティング、およびDTC加入者獲得への支出が短期的な収益性の重荷となっています。

アナリスト質疑応答のハイライト

資本配分およびVentures：経営陣は、放送事業のフリー・キャッシュ・フローの大部分は引き続きSinclair Television Groupにおける負債削減に充当されると説明しました。Venturesの現金は、テニス・チャンネル、デジタル事業、その他リターンを追求する投資を支援しつつ、将来的な大規模放送事業のトランザクションに向けた柔軟性を維持するために使用されます。

放送事業のM&A：シンクレアは過去12か月間で同一市場内の3つの放送局グループを取得しており、パイプラインにはさらなる市場最適化取引が含まれていると述べました。経営陣は、NexstarとTegnaを巡る状況が解決した後、より大規模な取引に適した環境が整備されると予想しています。

ネットワークおよびディストリビューターとの契約更新：ABCおよびCBSとの系列局契約の更新は完了しており、FOXとの交渉は継続中でした。大部分の主要な従来のMVPDとの契約は2027年末までに更新交渉が予定されています。経営陣は、最近の契約更新実績とディストリビューターとの建設的な関係を挙げ、放映中断リスクについては懸念していないと述べました。

電波帯域の収益化：経営陣は放送用電波帯域の潜在的な用途として、ATSC 3.0を通じたコアビデオ事業の強化、Edge Beamを通じたデータキャスティング、ならびに無線・衛星通信事業者への帯域貸与の3つを挙げました。シンクレアは、ATSC 3.0への移行完了がこれら3つの機会すべてを後押しすると述べています。

2028年の選挙サイクル：両二大政党の大統領予備選挙で現職が出馬しないオープン・プライマリーとなるため、経営陣は早期かつ積極的な広告支出が行われると予想しています。同社は、2026年の業績と激戦州市場における自社の存在感が、次の大統領選サイクルに向けて有利なポジションを築いているとみています。

決算説明会トランスクリプト全文

決算説明会の完全なトランスクリプト

経営陣による説明

Operator

Greetings. Good day, ladies and gentlemen, and welcome to the Sinclair Third Quarter 2026 Earnings Conference Call. [Operator Instructions] And please note, this conference is being recorded. I will now turn the conference over to your host, Chris King, Vice President of Investor Relations. Sir, the floor is yours.

Christopher King

Thank you. Good afternoon, everyone, and thank you for joining Sinclair's Third Quarter 2026 Earnings Conference Call. Joining me on the call today are Chris Ripley, our President and Chief Executive Officer; Narinder Sahai, our Executive Vice President and Chief Financial Officer; and Rob Weisbord, our Chief Operating Officer and President of Local Media.

Before we begin, I want to remind everyone that slides for today's earnings call are available on our website, sbgi.net, on the Events and Presentations page of the Investor Relations portion of the site. A webcast replay will remain available on our website until our next quarterly earnings release. Certain matters discussed on this call may include forward-looking statements regarding, among other things, future operating results. Such statements are subject to several risks and uncertainties. Actual results in the future could differ from those described in the forward-looking statements because of various important factors. Such factors have been set forth in the company's most recent reports as filed with the SEC and included in our third quarter earnings release.

The company undertakes no obligation to update these forward-looking statements. Included on the call will be a discussion of non-GAAP financial measures, specifically adjusted EBITDA. These measures are not formulated in accordance with GAAP, are not meant to replace GAAP measurements and may differ from other companies' uses or formulations. Further discussions and reconciliations of the company's non-GAAP financial measures to comparable GAAP financial measures can be found in the company's third quarter earnings release. Please note that unless otherwise noted, all year-over-year comparisons throughout today's call are presented on an as-reported basis.

Let me now turn the call over to Chris Ripley.

Christopher Ripley

Thank you, Chris, and good afternoon, everyone. Let me begin on Slide 3. I Sinclair delivered another strong quarter of results with political revenues of $136 million during the quarter, up 55% versus the third quarter of 2022, which was the last midterm election cycle. For the quarter, total revenue was $893 million, up 16% year-over-year, while adjusted EBITDA was $213 million, more than doubling last year's amount. .

Growth was led by political advertising, and that continued strong paid of demand was seen through yesterday's election, with our final political revenue figure expected to be approximately $455 million for the full year, well ahead of all our prior forecast.

Distribution revenue continued to grow, supported by partner station buy-ins completed over the past year. Tennis channel continued to deliver strong growth with core revenue up 21% year-over-year while seeing continued growth in our D2C subscriber base. AMP Media also saw strong growth on increasing demand across all our social products, including our new podcasts and partnerships with key advertisers.

Before turning the call over to Rob to cover our strong political results, I did want to provide an update on our strategic review process, which we originally outlined in August of last year. We continue to evaluate various broadcast transactions, and while pleased with the progress we have made so far, we believe opportunities still remain. We have also evaluated the separation of the Ventures portfolio through a spin-off, split off or other transaction and have determined at this time not to separate ventures on a stand-alone basis.

However, larger broadcast combinations that could include a spin merge are still an opportunity. We will continue to evaluate all options that provide value creation for the company's shareholders. Narinder will provide some additional details a bit later. But for now, let me turn the call over to Rob to run through our political results.

Robert Weisbord

Thank you, Chris, and good afternoon, everyone. Turning to Slide 4, the 2026 midterm election cycle delivered strong results across the country for us as we expect to book approximately $455 million in political revenue for the year following yesterday's mid-term elections. .

This represents a 12% growth versus 2024 presidential election cycle and a 37% growth versus the last midterm cycle in 2022. Of note, this compares quite favorably to our initial guidance provided in February of at least $333 million as well as our updated guidance in August of at least $375 million. To touch on 2 topics briefly, we believe that political crowd out was certainly evident in our numbers, but also managed given [ core ] trends. Also, we did not experience a meaningful impact from the lowest unit rate early by the various courts, including the Supreme Court, which updated the FCC's authority to allow political parties to enjoy the same [ LUR ] protection that has been historically granted just to the candidates themselves.

We believe that any pricing adjustments that were made as a result of the [ LUR ] threshold were offset by the increased demand coming from the parties. We believe this political environment bodes well for the upcoming 2028 election cycle, which will be here before we know it. Notably, 2028 will represent a dual open primary in both parties for the presidential nominations so we expect early and aggressive spending as both parties will want to introduce a new name nationally.

While our footprint is well positioned throughout many battleground states, we also believe that the entire broadcast sector did well during the election cycle, given recent management commentaries and industry forecasts. This profits evidence once again of local broadcast television being a key delivery platform for political advertising.

Sinclair has a proven track record of strong local news operations that support the ability to deliver knowledgeable, independent votes, which can be seen in our political revenue results discussed today. In addition, I wanted to touch on the continued strong viewership levels being seen in the NFL broadcast. Through week 7, total NFL viewership is up 4% year-over-year, averaging 18.4 million viewers, the highest viewership level through the first 7 weeks of the season in over a decade. In fact, NFL games ranked as the top 40 shows on television since the start of the 2026 season. More than 203 Americans have watched the NFL so far this season, according to Nielsen Media Research.

And the NFL isn't the only sport of record viewership as total college football viewing is up 2% over last year's record high pace according to Nielsen. Broadcast position as the prime [indiscernible] viewing windows, particularly with live sports remains more dominant than ever, and we are delivering the results.

Now let me turn the call over to Narinder to run through our financial results.

Narinder Sahai

Thank you, Rob, and good afternoon, everyone. Turning to Slide 5, I will walk through our third quarter results. Total company revenue was $893 million, up 16% year-over-year, driven primarily by political advertising and continued modest distribution revenue growth. Adjusted EBITDA was $213 million, up 113%, reflecting strong political revenue and disciplined expense management. .

Political advertising revenue of $136 million was the largest contributor to growth, up 55% from the third quarter of 2022. Distribution revenue increased 1% supported by continued moderation in subscriber churn and the benefit of partner station buying. Core advertising revenue declined 4%, reflecting political crowd-out and continued caution in a handful of cost pressures, consumer-facing categories where fuel volatility and broader inflation for squeezing advertisers' budgets.

In local media, revenue was $789 million, up 18%, and adjusted EBITDA was $205 million, up 123% driven by strong political revenue. [indiscernible] was $71 million, up 6%. Core advertising revenue increased 21% and distribution revenue increased 2%, supported by continued direct-to-consumer subscriber growth. Tennis adjusted EBITDA was $15 million, down approximately $1 million, primarily reflecting higher programming and production costs and continued investment in our direct-to-consumer platform.

Turning to Slide 6. We continue to make meaningful progress on deleveraging. During the third quarter, we repurchased and retired $25 million face amount of our B7 term loan at a discount and repaid and terminated the remaining B3 term loan balance, further reducing our cash interest expense. At quarter end, total debt was approximately $4 billion, with no material maturity until December of 2029, excluding the accounts receivable facility.

Sinclair Television Group, or STT net leverage, was 5.1x down from 5.2x last quarter and 6x a year ago. We ended the quarter with $659 million of consolidated cash and cash equivalents, including $170 million at STG and $489 million at Ventures. Including undrawn revolver and AR facility capacity, total liquidity was approximately $1.4 billion. Year-to-date, we have repaid or retired approximately $355 million of debt principal.

We will continue to manage our maturity schedule carefully and reduce the total amount of debt outstanding. Deleveraging remains our top capital allocation priority while maintaining ample liquidity and investing selectively their returns are attractive. As Chris mentioned, we have determined at this time not to separate vendors on a stand-alone basis. Let me add a couple of points on what that means for capital allocation.

First, broadcast free cash flow remains dedicated to reducing debt at STG. And second, Ventures will continue to monetize minority positions, redeploy capital into return-seeking investments and continue to invest in the growth of Tennis Channel and digital run rate. Turning to Slide 7. We are raising our full year 2026 guidance on the strength of political revenue and continued cost discipline. Full year political revenue is now expected to be approximately $455 million versus our prior of at least $375 million. That is a record political year for Sinclair achieved in a midterm cycle.

Higher political revenue brought somewhat more crowd-out, so we have narrowed core advertising guidance to $1.22 billion to $1.25 billion within our prior range. We have also narrowed distribution revenue guidance to $1.735 billion to $1.775 billion with the midpoint unchanged, reflecting more certainty as we approach year-end. Consolidated adjusted EBITDA guidance is now $825 million to $835 million, up $85 million at the midpoint.

Political is the largest driver, but not the only one. The increase is larger than the step-up in our political outlook and reflects continued cost discipline across the business. Consolidated total revenue guidance is now $3.53 billion to $3.6 billion, up $95 million at the midpoint. Capital expenditures, net interest expense and net cash tax guidance are unchanged. We will provide full year 2027 guidance with our fourth quarter results in late February.

In the meantime, let me offer a few early thoughts on the building blocks for 2027. On core advertising, 2027 will not have the benefit of the Olympics or the World Cup. There is some uncertainty on the MLB season given the ongoing labor negotiations and we remain mindful of the macro backdrop. At the same time, the inventory that political occupied this year frees up for Core and our digital cross-platform and podcast businesses continue to grow.

On distribution, subscriber churn continues to moderate, both in our numbers and in what the largest distributors are reporting. Our new ABC and CBS affiliation agreements are in place. Our FOX renewal is in December and a significant portion of our MVPD subscribers come for renewal next year. We will also have full year effects of the St. Louis affiliation change and the Charter/Cox combination. And as an odd year, 2027 will, of course, reflect off-cycle political revenues. On cost, you can expect us to build on the discipline you have seen in 2026, and we expect capital expenditures to be broadly in line with 2026 levels.

With that, let me turn the call back to Chris for closing comments before we open the call for questions.

Christopher Ripley

Thanks, Narinder. We're very pleased with the strong political revenue results this year as the demand for political advertising time exceeded our expectations in almost every contested state. We believe this continues to demonstrate not only Sinclair's ability to attract significant political dollars due to our strong operations and our ability to deliver undecided viewers but also the industry's strong positioning as the ongoing leader in political advertising.

We obviously must wait and see how other media players did over the coming days, but it certainly appears that local broadcasters are likely to have at least maintained, if not grown our overall market share of political advertising. I wanted to wrap up briefly by touching on our ongoing market optimization efforts. While we believe in transformational M&A for the broadcast industry, we have also been continuing our ongoing strategies to optimize our station portfolio.

We have acquired stations in various markets from other basters as well as our JSC stage partners throughout this year, and we believe the potential for larger station swaps with other broadcasters is significant. We remain encouraged by the broader regulatory environment for the industry, and we anticipate additional station optimization transactions over the coming months, and we look forward to keeping you updated on our progress.

Thank you for joining us today and your interest in Sinclair. Operator, we will now open the call for questions.

Operator

[Operator Instructions]

Our first question today is coming from Dan Kurnos with Stonex.

質疑応答

Daniel Kurnos

Chris, I'm going to frame it this way. I applaud you guys for making the decision, difficult decision to kind of not stand-alone spin ventures at this time. I think that's probably in line with what the market was looking for. And I guess, just more color on the decision or the thinking of how you arrived at that decision. And I know that Narinder in his own remarks gave some color around sort of the cash flow, but you do have a lot of cash sitting there. it could in theory be used for debt pay down. So just any view on willingness to put that back into sort of the broadcast side of the equation.

Number one. And number two, Narinder, you talked about the renewals on the reverse side. We've been waiting to kind of get an update at the end of the year from you guys on how to think about longer tailed net retrans. So just any initial thoughts or color that you could give us post those renewals would be super helpful.

Christopher Ripley

Sure. Thanks, Dan. So look, in terms of our evaluation, certainly, on paper, separating our ventures would create value, but it would also reduce strategic flexibility. And so we concluded that we wouldn't spend on a stand-alone basis, but a spin/merge is still a priority. And as Narinder mentioned in his remarks, the cash at Ventures are still going to be used to find return maximizing investments.

In terms of renewals on networks, I think was your next question, right, we have just completed renewals with ABC and CBS, and we are actually in negotiations currently with Fox. And furthermore, pretty much everyone or major MVPDs NPDs is up between the end of this year and the 12 months after that. So there are a lot of moving pieces, all, we think, very positive for the company.

First, I'll start with the networks. There is something I'd like to often talk about, but I'll repeat, again, is that the payments that we give to the networks need to be rebalanced vis-a-vis what [ position ] is on streaming. And since our last renewal round, all of the networks now have streaming platforms, including Fox, and there needs to be a rebalance between how much is paid for this content by the streaming side of the house, so to speak, and within the linear side.

And so that that is the core sort of issue at hand. And I think we're having very good success bringing that to the networks in those negotiations. And in terms of our MVPDs, which are up in 2027, by and large, we have a very, I think, positive story there, but that's going to have to play out over the course of the next year.

Daniel Kurnos

Got it. Congrats on the strong results. .

Operator

Our next question is coming from Aaron Watts with Deutsche Bank. .

Aaron Watts

2 questions, if I may. The first on core advertising with the election behind us, can you talk a little bit more about what you're seeing from the environment, the remainder of this year and into early '27, maybe you can highlight some key verticals, including auto and how they're trending, given the persistent high fuel prices, lingering macro uncertainties, et cetera.

Robert Weisbord

Yes, Aaron, this is Rob. With auto trended stable in the third quarter, is down slightly right now going into fourth quarter, with the auto prices and the cost of goods. So we're keeping an eye on that. As Narinder mentioned, we'll have a plethora of spots that are available going into next year that was absorbed by political spots. And right now, we're finding our plans on how to absorb that through unique programs. So we expect to rebound, but traditionally, what we have to do is go back to the advertisers that are crowded out and encourage them now that the election is over to come back to broadcasting.

There is some pressure sensitive such as medical, legal and food that we're seeing some declines in due to the pricing and the high prices in those categories. And again, so we're keeping our eye on that. But again, we know that dilemma that's in front of us. So there are some strategic plans to generate revenue with core advertisers, but not just solely relying on the spot business.

Aaron Watts

That's helpful. And then 1 more question, if I could, maybe towards Narinder, you paid down over $200 million of debt in 2Q, a much smaller denomination this quarter. Political cash lands, what should we expect going forward in terms of opportunistic debt repayment? And sorry if I missed this, but did you say if there are any updated thoughts around the cash at Ventures and whether that could go towards debt repayment as well? And how do you think about prioritizing certain pieces of your debt?

Narinder Sahai

Yes. Aaron, thanks for the question. Well, as I mentioned in my remarks, so political cash has just come in and the cash that comes in at STG or the broadcast business, a significant majority of the cash is earmarked for reducing leverage and for reducing debt. Obviously, not at the expense of continuing to invest in the business and attractive return opportunities where they exist. So we will continue to do that, but a great majority of that cash at broadcast is going to go towards strengthening the balance sheet.

As far as you know, Ventures is concerned, I think we just mentioned to you, stand-alone separation is off the table. There is a significant amount of cash that's sitting there. And that cash helps us have some optionality around a large-scale broadcast transaction, right? And also Ventures is going to continue to monetize its minority investment positions, with more cash on the balance sheet and then deploy the cash into the growth of Tennis Channel and digital reality. As a reminder, those businesses sit in Ventures and then also go out and seek return-seeking investments whatever they might be. So that's on thought process that we have outlined, and I hope that lends sufficient clarity on how we are thinking about capital allocation.

Operator

our next question is coming from Steven Cahall with Wells Fargo.

Steven Cahall

Chris, it seems like the industry has gone kind of quiet on M&A discussions. And my guess is that's because everyone's been breaking in political money and trying to get that on the balance sheet. You all have been probably the most proactive. Is your expectation that as we get into 2027, conversations will restart with maybe the [ shot block ] starting to tick down a little bit on the FCC.

And what do you think needs to happen for the bid/ask or the buyers and sellers to start to come together that hasn't happened so far? And then just a question on spectrum. It seems like if the FCC can move to sunset ATSC 1.0 then there could be a little more optimism about some of the potential to use excess broadcast spectrum. I was wondering if you've been involved in any efforts for that? Or if you see any other opportunities to generate value for the industry in the relative near term on spectrum and what seems like a pretty accommodative FCC.

Christopher Ripley

Great. Thanks, Steve. So look, on the M&A front, there is already a lot of activity over here in Sinclair around market optimization. In addition to our partner station buy-ins, we've acquired 3 different in-market station groups over the last 12 months. And we have many more in our pipeline across multiple counterparties within the industry. So I would say that side of the market is pretty constructive and the types of synergy opportunities that we're seeing are very significant.

And so that part of the market is already very vibrant and sort of the recent regulatory actions at the FCC have certainly facilitated that. And in terms of larger deals, we're certainly ready and willing and able to jump on larger deals. So I think there will be a constructive environment for that once we see a resolution to the Nexstar Tegna situation. I do think that's out there as [ preventing ] some people from moving forward in a more constructive way. But otherwise, the regulatory environment right now is as good as it's ever been. And we're looking forward to not only market optimization opportunities, like I mentioned, but the larger deal market freeing up here shortly.

In terms of the spectrum side, look, I think the way I see our spectrum is there's 3 buckets of monetization for our spectrum. Number 1 is, of course, our core business of providing video. And ATSC 3.0 will allow us to provide better pictures, better sounds, modern experience, interactive features, more content enhanced consumer experience. And we're already rolling some of that out in the 3 markets that we have. And the final completion of the transaction, I think, will be really great for our consumers and our core business.

And by the way, on a monetization front, not only will our consumers be happier, but we will open up new areas of monetization through those interactive features and through dynamic ad search and capabilities. The second bucket of monetization is data casting. And that is what Edge Beam was formed to work on. They're making great progress in areas like enhanced GPS, digital signage, automotive. And that is going to be a market that will continue to develop over time.

It's a new endeavor, so it does take a ramp. And it will also be greatly facilitated by additional spectrum being made available and the transition to 3.0 finally be completed. And then the third bucket is something that there's been a lot more talk about recently is leasing the spectrum to wireless or satellite players.

And I think that is also an opportunity which will be available for the broadcasters on a go-forward basis. And now that we have finished the [indiscernible] and as an industry, we have largely achieved our objectives from a regulatory perspective on the ownership front. The next big priority for that industry for our industry is completing the 3.0 transition. And there is an NPRM in front of the FCC, which seeks to do that. And we are looking forward to working constructively with Chairman [ Karr ] to figure out the final form of that and get through the final transition and open up these 3 monetization streams.

Operator

Our next question is coming from Benjamin Soff with Deutsche Bank.

Benjamin Soff

Thanks for the question. Obviously, really strong results on the political side. I was wondering if you could spend a bit digging into the different fundamental drivers there, where we saw that performance coming from? And what are your key takeaways from this election as we think about 2028? And then could you remind us what the growth initiatives are you working for Tennis channel and how that business fits into your broader portfolio strategically?

Christopher Ripley

All right. Well, I'll speak a little bit about the first question around what drove our results. And then -- but I'm going to pass it off to Rob to speak more about political because, obviously, political massively exceeded our expectations that exceeded the midterms. But also underneath, we had several other levers being pulled here at Sinclair.

One was improved churn, largely driven by Charter and DIRECTV. And so those 2 very large MVPDs have been -- have improved their performance. And so that helped out this year. We also have completed several big projects here at Sinclair like our cloud transition and other projects beyond that have come to close or have been transferred to other companies, like Edge Beam, for instance. And so there has been a quantum of expense that has extra expense that has been naturally eliminated.

And then we have been, as Narinder has alluded to many times, we've been very focused and disciplined on the cost side, taking out duplicative and unnecessary costs using latest technologies like AI to enhance our workflows. And also, we had the M&A this year, although it's been on the small market optimization side, it has had a cumulative very positive impact in '26, including our JSA buy-ins and those 3 different markets that we transacted on in -- over the last 12 months. So I'll turn it over to Rob to speak a little bit more about political, which is, of course, the big story. And I think a really, really great read-through for what's going to happen in 2028. But Rob, do you want to say a word on that, and then I'll cycle back on your Tennis question.

Robert Weisbord

Yes. We were positioned nicely in a lot of contested races, senatorial, gubinatorial house and we were able to be able to handle the tonnage of volume through our algorithm pricing system that we use. So we are in place to handle that volume. How it breaks out is between party and candidates, 38% of political spend came from that category, while 62% came from the issue pack side of this.

And so again, it's a lot of heavy work on the expansion and our national team dealing with the volume, but you have to be able to price it, you have to be able to run it. And so as Chris indicated, it sets us up well for the open presidential seat, and coming out of these races, the Republicans are going to look to rebound.

And why we believe the money still flows to broadcast is the fact that we're able to give coverage of all the issues. We're able to give an unbiased interviews with all the candidates running and officials getting elected is exactly where we're positioned in the marketplace as our people live where they work, and it shows the resiliency of the reach and statute still of local broadcasters.

Christopher Ripley

So to address Tennis, look, we're very pleased with the trends that we're seeing at Tennis. As was mentioned, our core advertising in the quarter was up 21% year-over-year. Distribution revenue of 2% driven by D2C subscription growth. So there's a lot of good trends going on at Tennis from an industry perspective, but also from a company perspective.

So industry perspective, interest and participating in Tennis continue to increase post COVID. So COVID sort of reigniting the industry as it did the sport, if you will, as it did several other sports and that momentum continues through to today. And just to give a flavor, the all year, Tennis Channel has been setting new rating records on its cable. It's linear cable. So there are not too many cable channels that I'm aware of that are actually growing audience across all key metrics and tennis channel as a stand up in that regard, Q3 rate increase across all key demographics.

The Cincinnati Open, which was this summer became Tennis Channel's most viewed tournament ever and August was Tennis Channel's most watched month ever. So that's just kind of core linear channel strength. But then on top of that, you have Tennis Channel too, which is a free ad-supported channel that continues to grow in terms of audience and distribution.

It's not fully distributed yet, but it's on many FAS platforms. It's on various cable platforms, it's on YouTube TV and we'll continue to expand its distribution over time. But the types of increases you're seeing on that channel are double digits in terms of audience flow. So that's -- it's a whole new linear channel that is fueling growth.

And then you've got social and digital outlets, which are seeing tremendous growth in the double digits in terms of traffic and interesting engagement. So with our new leader over there, Jeff Blackburn, he's rebuilt the entire digital infrastructure at Tennis Channel from the website and culminating with new apps that we're going to be delivering in December. So we will be in-house on those apps free from third-party vendors and controlling our destiny there with a vastly superior product. Quicker iterations, A/B testing, the ability to iterate our product in a much faster way. So to really understand tests from a high level, the biggest opportunity within Tennis beyond just the core growth that I described is the ramp-up of streaming.

And we have -- with the new apps coming and having all of our content now available direct to consumer, there's a tremendous opportunity to ramp up subscribers on the streaming side. So we're investing, certainly, the company is in investment mode. It's investing in content, it's investing in technology, it's investing in marketing for subscriber acquisition. So that's why you're seeing the profitability to do what it's doing, but the top line is growing very nicely and the trends are very positive there in Tennis.

Robert Weisbord

And I'd add, we're building on the culture of the sport, where we bring the [indiscernible] and talent to all the Master 1000s and some of the 500 events along with 2 majors, the U.S. Open and Roland Garros and having our talent doing live interviews where the fans are -- they are watching in the background allows them to touch and feel outside of the live play. And that's part of the strategy of building the culture, both on our social platforms as well as live events.

Operator

Our next question is coming from David Karnovsky with JPMorgan.

David Karnovsky

Maybe just a few more on sports. Maybe just first for Narinder. I don't know if you can frame the cyclical benefit from the Olympics and World Cup in 2026. To the extent there is no MLB season, which I guess was a possibility. Is this mainly an advertising impact to Sinclair. Do your retrans agreements acquire any kind of game delivery....

Christopher Ripley

No. We don't have any -- there's no impact to our [ NPD ] agreements. There are no covenants that require us to have a certain number of MLB games, for instance. So no concerns there. And then in terms of the sports broadcasting act and the regulators, you did see earlier this year, hearing on that. I think it was quite clear that lawmakers see the Broadcasting Act as being purposely drafted to exclude or grant antitrust interest carve-out to the leagues only as it relates to broadcast.

And that was made clear in those hearings. And it also was made clear when college came around and tried to get the same items pushed through on legislation, they were going to have to live with the same card out only as it relates to broadcast. And so we were very pleased with that outcome. Ultimately, that piece of legislation never went through. But that's the way it was drafted. And it just reinforces that from a [ rules of the road ] perspective, these major sports are supposed to be engaging with broadcast on a collective basis.

And it's better for their business. It's better for the consumer. There is a fundamental sort of access to content point when it comes to sports that I think, is very much hits home with lawmakers. And that's why the law is drafted the way it is.

Narinder Sahai

Yes. On the first part of your question, I'll answer it a little bit more broadly on how we're thinking about core advertising. As you know, '27 is going to be a tougher comp year, not just because political rolls off, and that's obviously impacts for to the extent that is [indiscernible] Core kind of bounces back. but then tougher comp because you don't have the benefit of Olympics or the World Cup, as I mentioned, and there is some uncertainty on the MLB season.

And that's mostly the impact is on is on advertising side of the house. It's quite possible that the MLB negotiations get pushed out to 2028. So we'll just have to kind of wait and see what happens there, David. So I think net-net, there are some things to keep in mind as you're thinking about have core advertising. There are several puts and takes here. On the plus side, though, our digital business continues to grow. We continue to make good progress on cost platforms and broadcast businesses.

So those are some of the puts and takes you kind of have to keep in mind. But as far as MLB goes, the main impact is going to be on the core advertising.

Operator

[Operator Instructions] Our next question is coming from David Hamburger with Morgan Stanley.

David Hamburger

I was wondering, could you elaborate on subscriber churn? I think you had alluded to some improvement, and we've seen some of the video numbers from Charter. Just curious, historically, it said mid-single-digit churn had been kind of the norm and wonder if that's improved. And if you can kind of paint that against the backdrop of distribution revenue was up 1% year-over-year, how you think about the trajectory and what -- as you have all the renewals next year, we've seen a lot of blackouts as well. Just if you could kind of elaborate maybe a little bit on how you're approaching those discussions.

Christopher Ripley

Sure. So look, overall churn is in the mid-single digits. It has improved on the traditional side mainly, as I said, related to the improvements at Charter, but also DIRECTV has been doing better, especially when you look at DIRECTV combined with DIRECTV stream. And we're seeing the rest of the MVPD start to take notice to what Charter is doing and start to pursue similar strategies.

So we're very heartened by that. We think the Charter strategy is the right strategy. It gives the consumer a ton more value you net out all the streaming platforms that are put into the base offering or the expanded cable offering from Charter, it makes the cost of legacy cable, which is the broadcast networks and some cable channels, about $30 a month. So it's a huge change from $100 a month, which is where it was a couple of years ago.

And we hope everyone will follow Charter's lead. And by the way, they just bought Cox. And so they'll be rolling out the same packaging on Cox's subscriber base very shortly here. And so it's a strategy that works. It's helping us. It's helping the industry and it is having an impact on churn. And as it relates to our gross line, it is -- we were up 1%. I think what's notable there is that we did not have any major renewals this year.

And the only thing that really helped us along was the JSA partner buy-ins. And we were still, I think -- so we're pleased with the outcome there not having any renewal step-ups. As we go into next year, we will have quite a few negotiations, very much all the major traditional MVPDs will be negotiating with over the span of next year. And so that should bode well for us. That generally means bigger increases in the initial renewal, and we have been able to navigate our last set of renewals. I think in 2024, where we had another big session of renewals and even 2021, we haven't had a single blackout through that period.

So in fact, I think our last, you'd have to go even back further beyond 2021. So I hear there has been [ blackouts ] for other broadcasters, and we kind of always get this question, but we have a very constructive process with the MVPDs, they are our partners, our most important partners, and we have very valuable content that they need to operate their systems. And we are not concerned about blackout risk.

David Hamburger

If I could just ask, could you talk about the MVPDs? I mean, I think we've noticed a little bit of deceleration for them, is that impacting some of your numbers as well?

Christopher Ripley

So look, I think it's fair that the virtual MPVDS are not growing quite as fast as they were, but they're still growing. And then -- on top of that, we also get paid for things like Peacock and Paramount+ and FOX1. And so are there sources of growth on sort of virtual side, lump those other platforms in there. And also for us, the most important trend are the traditional side. That's where we get paid the most.

Operator

Ladies and gentlemen, this will conclude our question-and-answer session. I would now like to turn the call back over to Mr. Ripley for any closing remarks.

Christopher Ripley

Thank you all for joining us on our Q3 earnings call. To the extent you have any questions or comments, please don't hesitate to reach out to us. Thank you.

Operator

Thank you. Ladies and gentlemen, this does conclude today's call. You may disconnect your lines at this time, and we thank you for your participation.