Broad Street Realty Q3 2024 Earnings Call Transcript

Quartr
Provided by Quartr
November 6, 2024

There are 10 speakers on the call.

Operator

Please note, this conference is being recorded. I will now turn the conference over to your host, Chris King, Vice President of Investor Relations. Chris, you may begin.

Speaker 1

Thank you. Good afternoon, everyone, and thank you for joining Sinclair's Q3 2024 earnings conference call. Joining me on the call today are Chris Ripley, our President and Chief Executive Officer Lucy Rudesshauser, 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, spgi.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.

Speaker 1

Certain matters discussed on this call may include forward looking statements regarding, among other things, future operating results. Such statements are subject to a number of risks and uncertainties. Actual results in the future could differ from those described in the forward looking statements as a result of various important factors. Such factors have been set forth in the company's most recent reports as filed with the SEC and included in our Q3 earnings release. The company undertakes no obligation to update these forward looking statements.

Speaker 1

Included on the call will be a discussion of non GAAP financial measures, specifically adjusted EBITDA. This measure is not formulated in accordance with GAAP and is not meant to replace GAAP measurements and may differ from other companies' uses or formulations. Further discussions and reconciliations of the company's non GAAP financial measures to comparable GAAP financial measures can be found on our website. Let me now turn the call over to Chris Ripley.

Speaker 2

Good afternoon, everyone, and thank you for joining us. I'll start on Slide 3 by highlighting our Q3 financial results on a consolidated basis. We delivered solid Q3 results that we are well above our guidance given in August, but came in modestly below the increased guidance that we provided in mid September. We were impacted by some late political ag cancellations from Nevada, which occurred in the last week of Q3 as campaigns moved monies to states and cities outside of our footprint where races grew tighter. Total distribution revenue was in line with our guidance range, thanks to solid outcomes on all distribution renewals.

Speaker 2

Core advertising revenues grew 1% in the 3rd quarter, which is a first for Sinclair to have grown core at a time when political advertising was at an all time high. Our sales teams delivered strong growth in both core and political advertising, which followed through to our adjusted EBITDA, which came in near the high end of our guidance range for the quarter. Lucie will go into more details in a moment. On slide 4, our Ventures portfolio received $5,000,000 in total distributions during the quarter and made approximately $7,000,000 in contributions. At quarter end, Ventures held $334,000,000 in cash, up $8,000,000 from cash levels at the end of the 2nd quarter.

Speaker 2

Turning to Slide 5, I wanted to take a minute to provide an update to the great re bundling thesis regarding the future of broadcast TV, which may better be made better termed as the great revaluing as the value proposition of Pay TV has significantly improved for the consumer. In recent quarters, we've seen Charter reach deals with Disney, Comcast, Paramount, Warner Bros. Discovery to include streaming services and in their cable TV packages. These streaming concessions are now a key part of MVPD content negotiations and represent a significant value to traditional MVPD subscribers. In fact, chartered customers now receive more than $78 per month worth of streaming services for free in their Select plus bundle, including Tennis Channel Plus.

Speaker 2

Not only does this accrete significant value to subscribers with the inclusion of these various premium streaming platforms, but it also significantly lowers the net effective rate for the traditional pay TV bundle of broadcast plus cable channels. In fact, in the case of Charter, we estimate that subscribers are now paying less than $40 a month for broadcast channels and traditional cable networks after factoring in the value of discounts in streaming platforms. This is a 63% discount from what Charter subscribers were paying for broadcasting cable channels just a year ago and is a 49% discount over YouTube TV's base plan for essentially the same channels. As you can see on the slide, we believe the value proposition of the broadcast channels are only increasing for MVPD customers. I was also very pleased to see that Charter is planning a major marketing push next year to promote the more than 10 streaming services it is offering at no additional cost to customers.

Speaker 2

We are now seeing similar dynamics at play with the recent DIRECTV Disney deal as well as the Charter Warner Bros. Discovery deal, which took place a year early. And turning to slide 6, we're beginning to see the results of this great re bundling. This data which comes from Nielsen's monthly The Gauge report shows the percentage of viewing minutes by platform on a monthly basis. What this chart shows is that broadcast market share has grown each of the past 2 months and is now relatively flat with the year ago figure.

Speaker 2

Broadcast share of viewing minutes has increased by 2 30 basis points over the past 2 months, while every other medium has lost share over the same timeframe. Broadcast viewership growth has been driven at least in part by live sports content on broadcast networks such as the Summer Olympics in both NFL and college football, which is why we're excited to continue to see more and more live sports rights moving back to broadcast TV and we're constantly looking for ways to work with MVPDs to emphasize this value for subscribers. Turning to slide 7, the broadcast industry continues to increase its sports content. Recently, Disney added more 6 more Monday night football games to ABC's programming, which will now have a total of 14 regular and postseason games televised the network this season. In addition, during the quarter, we announced a partnership with the Portland Trail Blazers to launch the Rip City Television Network and Blazer Vision, which will carry 65 to 80 Blazer games in the upcoming season.

Speaker 2

The Trail Blazers joined the Utah Jazz with the vast majority of their telecast on Sinclair stations this season. Notably, the Jazz and the Trail Blazers joined a long list of professional teams that have reached deals with over the air broadcast stations within the past couple of months in all major sports across the country. We believe this only supports the idea that broadcast television continues to be one of the most important mediums in the video industry today. In fact, we are excited to see the announcement that Fox recently sold out its Super Bowl inventory for its February game more than 3 months early. As FOX is our largest network affiliation, we are looking forward to broadcasting the game and the remainder of the NFL regular season and playoffs.

Speaker 2

Let me now turn the call over to Rob Weisbord to go over some additional details about our distribution progress as well as political advertising and exciting updates on our recent podcast launches.

Speaker 3

Thanks, Chris. On Slide 8, I want to provide an update on a very busy 3rd Q4 to date for our distribution team. During the Q3, we reached multiyear carriage agreements with Altice and DirecTV. We have now come to terms with MVPDs covering more than 78% of our big 4 cable, telco and satellite subscribers so far this year without a blackout. As a reminder, we have one network affiliation agreement, NBC which expires at year end with the remaining network agreements locked in till at least 2026.

Speaker 3

As a result of the strong progress we have made throughout the year, we are reiterating our guidance of a mid single digit CAGR for net retransmission revenues from 2023 through 2025. Turning to Slide 9, the 2024 political season has only reconfirmed the value of local broadcast and local news. For 2024, political revenues grew 16% as compared to our pre run off political total in 2020 of $350,000,000 During the Q3, we reported $138,000,000 in political advertising revenue, an all time high 3rd quarter watermark for us, which was $5,000,000 lower due to late cancellations during the last week of the quarter, most of which occurred in Nevada. Cancellations continued in the Q4 as well with another $21,000,000 of cancellations due to late geographic shifts of existing and also new commitments to non Sinclair markets. While political came in lighter than our increased guidance anticipated, we'd have only been $10,000,000 shot hitting our $442,000,000 estimate for the full year, if not for the $26,000,000 of cancellations.

Speaker 3

Of note, we experienced over $11,000,000 of cancellations from Nevada. And even though we are in several markets in Pennsylvania, those markets saw $6,000,000 cancellations as some monies within the state shifted to Philadelphia where we do not have a presence. We are now looking forward to what is likely to be a hotly contested midterm election in 2026 and the presidential race in 2028 with 2 open primaries as broadcast continues to be the dominant medium for political advertising. Following yesterday's election, the industry intends to turn its attention to several regulatory issues that will be front and center for the coming months. These include outdated broadcast rules that include nationwide ownership cap and prohibit the ownership of more than 2 top 4 ranked TV stations in the same local market as well as next gen broadcast standards including the prompt managed sunsetting of 1.0 signal transmissions.

Speaker 3

We are optimistic on progress being made on these and several other regulatory issues. On slide 10, we were very excited to launch 2 sports related podcasts in August September in conjunction with the start of the college football season. These podcasts, the Triple Option with Irvin Meyer, Mark Ingram and Rob Stone as well as Storebacks with Matt Leinen and Jerry Barra have consistently been ranked among Apple's top 10 sports podcasts. In addition, we just announced plans to launch a soccer focused podcast called Unfiltered Soccer with Landon and Tim with former U. S.

Speaker 3

Soccer stars Landon Donovan and Tim Howard. We couldn't be more excited about the strong and growing lineup of sports related podcasts. Before I turn the call over to Lucy, I did want to highlight our announcement made early today regarding the launch of our Tennis Channel direct to consumer product, which will be available nationwide on November 12 and will be free to current Tennis Channel subscribers. The product will offer subscribers complete access to our live Tennis Channel feed for the first time. Let me now turn the call over to Lucy to provide a more granular update on our financial results and balance sheet.

Speaker 4

Thanks, Rob. Turning to Slide 11. As Chris touched on earlier, we had solid 3rd quarter results. Our $138,000,000 in political ad revenues broke 3rd quarter records for us, and we would have met our revised political guidance if not for the $5,000,000 in late September cancellations. Moreover, despite the record political third quarter, we grew

Speaker 5

3rd quarter, we grew

Speaker 4

core advertising revenues by 1% year over year, an almost unheard of accomplishment and reconfirming our sales strategies around pricing, specialized sales categories and multi platform offerings that consumers and advertisers care about. Meanwhile, distribution revenues were up 5% year over year driven by renewal rate step ups and new carriage agreements on Tennis Channel over the past year, partially offset by distributor subscriber churn. Adjusted EBITDA came in within our guidance range as media expenses were modestly lower than our forecast. Additionally, CapEx was favorable to guidance primarily on timing of payments now expected to occur in the 4th quarter. Turning to Slide 12.

Speaker 4

Consolidated Media revenues of $908,000,000 were up 20% in the quarter versus last year on the higher political revenue as well as distribution revenues on the recent renewals in added carriage, which exceeded subscriber churn impact. As compared to guidance, distribution revenues were in line with our expectations. Approximately $5,000,000 of political advertising cancellations late in September resulted in us coming in $2,000,000 under our revised increased political guidance, while core revenues increased 1% year over year, modestly shy of our 2% to 4% revised guidance provided in mid September. But as we've pointed out now, growth in core advertising in the 3rd quarter, when we also have a record political quarter, is a first for us. On Slide 13, consolidated adjusted EBITDA for Q3 was $249,000,000 which was within our guidance range.

Speaker 4

Consolidated media revenues were just shy of our increased guidance, and media expenses came in approximately $5,000,000 favorable to our expectations at the midpoint on lower production, promotion and engineering costs, partially offset by higher than expected sales commissions on the higher revenue and employee costs associated with improved retention. As compared to last year, adjusted EBITDA increased by 72%, driven by the stronger political and distribution revenues, which were offset in part by corporate overhead expenses and sales costs on the higher revenue. Turning to Slide 14. For the Local Media segment, we delivered solid third quarter results with adjusted EBITDA coming in within our guidance range in spite of the late political cancellations and media expenses were slightly higher on the increased revenues and improved employee retention. Tennis Channel also had a strong quarter with media revenues up 2% year over year on distribution revenues, which grew 4% on renewals and added carriage over the past year.

Speaker 4

Tennis channels advertising revenues fell by 7% in the quarter. However, we note a $1,500,000 net change in non cash audience deficiency units. Excluding the non cash ADUs, Tennis Channel's ad revenue would have been up 10%. Tennis Channel's adjusted EBITDA was above guidance with expenses coming in favorable in part due to lower production costs and timing of expenses related to their direct to consumer product launch announced this morning. Embedded in Tennis Channel's $16,000,000 of adjusted EBITDA is approximately $2,000,000 of operating losses associated with future growth initiatives.

Speaker 4

Turning to our balance sheet metrics. On Slide 15, you can see our debt maturity stack profile with our next meaningful maturity in September 2026. Sinclair Television Group's 1st lien net leverage was 4.2x and total net leverage 5.3x at the end of the quarter on a trailing 8 quarter basis. Interest coverage was 2.8x as of September 30. Our consolidated cash position was $536,000,000 at quarterend with $202,000,000 at SBG and $334,000,000 at Ventures.

Speaker 4

Including our undrawn revolving commitments, total liquidity was $1,200,000,000 There were 66,400,000 total shares outstanding at quarter end. Slide 16 introduces our 4th quarter guidance. We are guiding consolidated media revenues to be in the range of $992,000,000 to $1,000,000,000 up 21% to 22% versus the year ago quarter, which is largely driven by the record political advertising growth. Core advertising is expected to decline by 5% to 7% largely on political crowd out of normal advertisers. However, this decline in core is roughly twothree of what recent historical levels have been in the Q4 of a political year, again showcasing that our sales strategies and content offerings are working.

Speaker 4

Political for the quarter came in at approximately $204,000,000 which was another record quarter pre runoffs despite the $21,000,000 in late cancellations, as Rob said, money shifted among key states. For the year, political of approximately $406,000,000 grew 16% over 20 20s, dollars 350,000,000 pre Georgia runoff total and again would have been $26,000,000 higher if not for those cancellations. Distribution revenue is expected to be up 3% year over year at the midpoint of our guidance range, and adjusted EBITDA is expected to be $314,000,000 to $325,000,000 in the quarter, up 74% to 81% over the year ago levels. Turning to Slide 17. We expect to finish the year with core advertising down 2%, which is roughly half of what our pro form a historical core has declined in political years.

Speaker 4

For 2024, political revenue is approximately $406,000,000 Distribution revenue is expected to be up 4% and media expense is up 5% over 2023, which includes the higher sales costs associated with the revenue growth. Now as compared to our initial full year 2024 guidance given in February, media expenses are estimated to be $25,000,000 favorable compared to the midpoint of our February guidance, and that's driven by our enterprise wide focus this year on cost controls across a variety of expense lines. In addition, non media expenses are expected to be $8,000,000 to $10,000,000 lower than our original full year guidance due to timing of certain expenses moving to $25,000,000 Capital expenditures are also expected to be lower than our original forecast by $20,000,000 at the midpoint of the February guidance range. And finally, of the $224,000,000 in cash distributions expected this year, $188,000,000 has already been received. And so with that, I'd like to turn the call back over to Chris for some closing comments.

Speaker 2

Thank you, Lucy. Turning to our key takeaways on slide 18. Sinclair delivered solid 3rd quarter results as core advertising revenues grew year over year during a quarter with record political revenues, a first for Sinclair in a political year. Political advertising revenues set records for the company during the Q3, Q4 as of Election Day and full year. Distribution revenues were up 5% year over year during the quarter as over 78% of our big four network MVPD linear subscriber base are now on new retransmission consent agreements since the beginning of the year, helping us reaffirm our guidance of estimated net retrans growth of mid single digits for the 2023 to 2025 2 year CAGR.

Speaker 2

Full year EBITDA guidance reflects a growth rate of 53% to 55% year over year. In summary, we are pleased to deliver both core revenue growth in the Q3 and record political revenue growth this year. We believe our results demonstrate the continued strengths of both Sinclair's operations as well as the broader broadcast industry. And following last night's election results, we are optimistic for a more constructive regulatory environment for the industry. We have positioned the company well to take advantage of these opportunities and could not be more excited about its future.

Speaker 2

Lucy, Rob and I will now open the call to questions. Thank you for joining us today.

Operator

Thank you. At this time, we'll be conducting our question and answer Thank you. Our first question is coming from Steven Cahall with Wells Fargo. Your line is live.

Speaker 5

Maybe just first, Chris, can you talk a little bit about the decision to pre announce on political? I think back in 2022, there was some late breaking timing shifts on the political front. And so you decided to give the pre announced outlook for the year and then things kind of shifted again. So we'd just love to understand how things broke so much different than you expected and if this was different from 2022? And then second, there were some prior reports that your stations could be for sale and you talked a bit on the call about some of the positive regulatory changes that could happen, especially as the new FCC comes into effect.

Speaker 5

Should we think about Sinclair as more likely a buyer or a seller or a little bit of both if we do get into a point in time when the cap is higher? And then just finally on distribution revenue, up 5% in Q3. I think it's implied up 3% in Q4. So is Q3 the high point after all these successful renewals? Or is there still some room for it to grow?

Speaker 5

Thank you.

Speaker 2

Okay. Thanks, Steve. So, look, on the first question, when we took a look at what was happening in Q3 and we compared that to historical trends, be it in 2022 or even further back, it was pointing to a significantly higher number for Q4, which unfortunately didn't materialize because of the shift from some big cities or out of smaller cities into big cities and from some states to other states where we weren't located. So it was that sort of shift of that size is not something that we had previously experienced. And we had some cushion even with the implied guidance that we gave.

Speaker 2

So that's why we changed the guidance when we did. In terms of your M and A question, it's look, we're very excited about the upcoming regulatory environment. It does feel like a cloud over the industry is lifting here. And we do think some much needed modernization of the regulations will be forthcoming. And we intend to as we've always said consistently over the last few years, we intend to participate in that in the M and A in the industry be it as a buyer, as a seller or a merger partner.

Speaker 2

So whatever we can do to unlock our some of the parts valuation is really what we're focused on. And this new regulatory environment that we're about to come upon, we think will greatly facilitate that. And then on your last question, as it relates to top line growth on run retrans. Yes, I don't have those numbers right in front of me, but we wouldn't necessarily give that level of detail for upcoming quarters. But we still have 28% of our subscribers to go on renewal.

Speaker 2

And so we're expecting strong growth well into 2025.

Speaker 5

Thank you.

Operator

Thank you. Our next question is coming from Dan Kurnos with The Benchmark Company. Your line is live.

Speaker 6

Great, thanks. Can I just, Chris, just quickly follow-up on Steve's last question, just on distribution and just maybe ask it a different way and say, we know that some of your peers maybe have some timing elements in some of these, just to make sure that there were no blackouts? So I'm not asking for like specifics, but just wanted to understand if you're getting sort of full renewal in the current and out quarter on distribution? And then for Rob, maybe you can just kind of talk about underlying core trends post election. I mean, obviously, there's World Series in there.

Speaker 6

And I'm curious how much, if at all, you think Trump presidency given your Fox exposure would help or not from a core perspective? Thanks.

Speaker 2

So Barton, can you say your first question again? I'm not sure I quite really understand what you mean.

Speaker 6

Yes. Hey, Chris. Dan, anyway. Just I'm just asking, so like for example, if you have, so you did direct in Altice in the quarter and I was just curious if terms around your some of the renewals done in Q3, if you get the immediate step up, if there might be some timing elements like incremental step ups next year, just trying to make sure that we understand how much of the renewals are hitting in this quarter and how much we should be expecting sort of next year once you bake in the next 28%.

Speaker 2

All right. Okay. Yes, I think I understand your question now, Dan. So again, I can't get into the specific terms of any one agreement, but generally speaking, we do have step ups that kick in as soon as we renew. And we also have significant annual renewal step ups that happen as well.

Speaker 2

Annual And Rob, the core question. So I'll hand it over to Rob.

Speaker 3

Yes. Dan, a couple of things. As Lucy pointed out, we're currently trending at 2 thirds of being down versus traditional through the crowd out. And that goes to what I've been talking about for the past year of our pricing system using algorithms and the efficiencies of running our spots as they're booked. Obviously, in Q4, we had the World Series.

Speaker 3

Our largest group is Fox. But college football across our networks are are doing well. You're seeing marquee matchups every single week. And so we're able to capitalize on these. Some of these could have been championship games that we witnessed early in the season.

Speaker 3

And so and going into next year with our box stations having the Super Bowl, we think will carry over our successes into Q1 of next year. And even with the record political, normally everybody asks about automotive and we've been able to keep our pace without having to lose much of our automotive business, which was relatively flat to down 1% even with all the crowd out. So we are cautiously optimistic that we're seeing the return of eyeballs pointed out by traditionally you hear the words on the street that the younger people don't watch broadcast. But in the World Series, the 18 to 34 demo was up 100% in this year's World Series. So as Chris was iterating on, we're bullish that sports is bringing eyeballs back to broadcast.

Speaker 1

Got it. Super helpful. Thanks guys.

Operator

Thank you. Our next question is coming from Burton Crockett with Rosenblatt. Your line is live.

Speaker 7

Hi, thanks for taking the question. I was interested in the commentary around the regulatory environment. And because as I recall, you guys had some issues with the SEC under the former Trump administration with your Tribune deal. And so I'm just wondering if there's been anything specific that's been said or that you've seen that gives you the confidence that you get some hope for kind of loosening of the regulatory situation there, if there's anything you can point to other than just your hopes?

Speaker 2

Sure. Actually there's something I think very salient to point out there. So I'm glad you asked this question. If you remember, Chairman Pai enacted new rules, did a certain measure of deregulation, when he was in power and that included getting rid of cross ownership. It included allowing 2 of the big 4 subject to waiver.

Speaker 2

It reinstated JSAs and SSAs And it's that way it was then challenged and it went all the way to the Supreme Court and the SEC won and those rules were then the rules of the day. Now all that time until that was all sorted out largely ate up most of that FCC's term. And so shortly thereafter, we had a changeover in government in the White House and a changeover in the FCC. So we from our perspective, we really haven't lived in a world where even the current rules have been in effect or at least followed by the FCC. So just that alone adjudicating the rules as they currently stand is a huge benefit for the industry.

Speaker 2

And we're hopeful that there'll be further relief as it just isn't consistent with a level playing field versus Big Tech or Big Media. And I think the Republican Party understands that.

Speaker 7

Okay. I mean, it's clearly not the same. But I was also wondering, switching gears a little bit, Fox was reporting some deceleration in the pace of subscriber decline. Can you guys update us on what you're seeing anything like that or just give us what the numbers are?

Speaker 2

So we're still around mid single digits for our overall churn. That hasn't changed in a while. We do see results in arrears in terms of the submissions that come to us because most MVPDs pay us and remit in 60 to 90 days after. But I will note that both Charter and Comcast exceeded expectations on video subchurn in this most recent quarter that they announced. So they that tends to lead the information that we receive.

Speaker 2

And so we were very hard to see the trends of the 2 largest MEPDs improve there. And then as we pointed out in the presentation, the Charter streaming bundling strategy is really just getting going. They're going to start a big marketing push next year. And when you take a look at the net effective price of pay TV being less than $40 a month, it's a massive change in the value proposition. And as they implement that in terms of a user experience and they promote it to their customers.

Speaker 2

We think the dynamic of a subscriber and their choice set of whether they would cut their subscription to Charter or not is significantly different. So we're anticipating that to have a very dramatic effect.

Speaker 7

Okay. That's great. And then just one final question. In your guide, can you give us any sense for this quarter and maybe even beyond your guide of the impact of this DTC launch with tennis? Is there anything material in the guide?

Speaker 7

And how should we think about that impacting the financials?

Speaker 2

Well, it's going to launch this month as we said. It will have some measure of expense that's built into the guide that we gave you for Q4. And 2025 for the DDC product will be an investmentbuild year, not significant in the grander scope of Sinclair. But we do think given that we are already paying for the rights for the DTC rights. So there's no incremental content costs here and we're opening up a significantly improved streaming product to consumers.

Speaker 2

We think that this will be an incremental contributor in a very short period of time to the results of Tennis Channel.

Speaker 3

Yes. I think you'll see an enhanced viewership. We'll be able to go to a multi view. So when there's multiple tournaments that are running at the same time, you can have the best of the whole world is viewing of the multiple tournaments and not being stuck just to what's showing up on the linear feed on the channel. So those tenants, enthusiasts and even the recreational, there'll be something for everyone inside the app.

Speaker 7

Okay. That sounds cool. Thank you guys very much.

Operator

Thank you. Our next question is coming from David Hamburger with Morgan Stanley. Your line is live.

Speaker 8

Hi. Thank you very much. Maybe you could talk a little bit about capital allocation. So you have $536,000,000 of consolidated cash. You have nearly $1,200,000,000 of debt maturities in 2026.

Speaker 8

You have talked in the past about keeping SPG cash and ventures cash separate as you think about funding for the different parts of the capital structure. So I'm wondering if you talk about how you approach 2026 debt maturity and maybe you could do that as well in the context of your M and A compments or about consolidation because in the past you've also been willing to avail yourself of financial flexibility in your credit docs to move assets around as you did with the ventures transaction previously and have said you might find it useful to use that in the future as well. So could you kind of talk about not just capital allocation, but asset allocation, how you approach the balance sheet, you approach leverage, you approach the potential consolidation and how from a debt perspective you're looking at the 2026 and even 2027 maturities? Thanks.

Speaker 2

Sure. So we think we have several options to address those upcoming maturities. And we're looking for that will deliver both the lowest cost of capital and the most flexibility from an M and A perspective. And that's not to move assets around necessarily as you implied. That is to be a participant in whatever transaction may come here in the future.

Speaker 2

I do expect that the industry will look at consolidation opportunities. And if that means that we're a buyer or a seller or a merger partner, we want a capital structure that contemplates doing that in an efficient manner.

Speaker 8

Okay. I mean you can elaborate further on what sort of capital structure. I mean you've talked about leverage, which is now at 5.3 times being I guess you had a leverage target that was a little bit lower than that. Given that next year is not a political year and then 2026 you'll be facing some of the debt maturities as they are stacked. Can you provide us any kind of guardrails or a sense as to how you look to manage the balance sheet maybe overall leverage maybe from that perspective?

Speaker 2

No. We're definitely focused on moving overall leverage down back to our target. So that's a focus. We think we will have no issue dealing with the maturities that we have upcoming. And to the extent that there are transactions, strategic transactions that come about into next year, those will likely be significant synergy generators.

Speaker 2

And just depending on the formulation of the transaction that should also help drive further deleveraging on top of the myriad of growth initiatives that we have running through the system like cloud our cloud transformation, like our podcasting division and our social division. So there's a lot that will help leverage move down naturally over time and then M and A I think will just accelerate that.

Speaker 8

Is capturing discounts and debt securities part of the deleveraging that you expect?

Speaker 2

We've been opportunistic in our buybacks. We bought $74,000,000 of debt that had a $91,000,000 par value since the beginning of 2023. We do think a more comprehensive solution for the 2026 to 2027 financings is something we're focused on right now. But I think that to the extent that discounts continue to be in the capital structure, we will definitely look to take advantage of that.

Speaker 8

Okay. Thank you very much. Appreciate it.

Operator

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

Speaker 9

Hi, thanks for having me on. Two questions. First, I felt the recent NBA TV rights deal and NBC's inclusion there was a positive for the broadcast TV space, including Sinclair. My question is whether Comcast look to its affiliate partners to help put the bill for those rights at a time when I know you and your peers are looking to moderate network compensation growth. What are your latest thoughts on that?

Speaker 9

And especially as you head towards a renewal with NBC at the end of this year. And then secondly, DIRECTV and Dish recently announced an agreement to come together. While that deal is yet to get done and may not get done, curious if you view this as a positive or a negative for Sinclair and the local TV broadcasters more broadly? And as part of that, can you comment on whether after acquired clauses would have an impact on your distribution fees if and when that deal was to be able to close?

Speaker 2

Sure. Thanks, Aaron. So look, I think the most recent example you can point to for your MBA question would be the last round of NFL contracts that went up. That did not create an appreciable change in trend even though the prices paid were quite significantly higher. That did not create a significant bump for the affiliates.

Speaker 2

And we don't expect that to be the case for the NBC NBA deal either. Though we're certainly supportive of them pursuing a more broadcast centric distribution model, we think it's beneficial for the league. It's beneficial for NBCU and we're happy to facilitate that as good partners. So our expectation is that that won't materially change the trend, which has been declining increases over time for reverse retrans. And then as it relates to DIRECTV DISH, to the extent that the combined company is healthier, we think that's probably a positive for the industry.

Speaker 2

Anytime you've got a major player that is distressed as DISH has been for a while, it just creates, we think, weird incentives. So we're to the extent that they create synergies, rationalize the capital structure, we think that will create a better functioning industry. Now certainly there are some competition issues, which will have to be looked at as it relates to some rural markets, where choice is limited for consumers to only those 2. And that will have to be looked at from a regulatory perspective. But we also to your last question as it relates to this, we don't anticipate any impact to our retransmission fees post closing.

Speaker 9

Appreciate the thoughts, Chris. Thanks.

Speaker 2

Thanks, Aaron.

Operator

Thank you. As we have no further questions in queue at this time, I would like to hand it back to Mr. Ripley for any closing remarks.

Speaker 2

Thank you. And thank you all for joining us today. To the extent you have any questions or comments, please feel free to reach out to us and the IR team. Thank you.

Operator

Thank you, ladies and gentlemen. This does conclude today's conference and you may disconnect your lines at this time. And we thank you for your participation.

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