Strong Political Ad Growth Helps Boost Sinclair in Q3; Core Ad Weakness Could Expand in 2023

Sinclair reported a slightly better-than-expected third quarter as revenue was in line with and adjusted EBITDA beat FactSet consensus. Political ad spending through the third quarter is up 50% versus 2018 pro forma and only down 2% from 2020, a presidential election year. Management expects full-year political ad revenue to reach $335 million-$340 million, a record midterm year and 30% ahead of 2018. Despite the positive political ad news, core ad revenue fell 10% due in part to crowding out from political ads but also weakness in insurance and sports betting. We plan to lower our $30 fair value estimate after updating our model to account for slower ad growth.