Executive Summary

• Everybody dance now: M&A should drive total returns again in 2026. Broadcast TV M&A will likely again dominate the news flow for the sector in 2026. Although activity could be muted in 1H26, we think the Nexstar/TEGNA outcome could drive additional activity in 2H26, especially if it passes regulatory muster with few conditions. The FCC may move to eliminate the 39% cap this year and waive limitations on local duopolies, which would drive substantial merger cost savings.

• Retrans: peak or plateau? We are forecasting a 1% increase in retrans revenue for 2026, with Nexstar, Scripps and Univision getting renewal boosts, while Sinclair and Gray may lag due to renewal timing (and GTN’s loss of CBS in Atlanta). This suggests that retrans is somewhat plateauing, where fee increases offset subscriber declines, whereas investors have more feared a “peak” with substantial declines. Broadcast’s seat at the table is relatively firm, given the larger array of sports content and the sector could get a lifeline if the NFL extends its media rights with TV partners into the 2030s.

• Mixed bag for core advertising outlook. Core advertising remains a weak spot for local broadcasters, as we expect continued sluggishness out of the auto sector, categories like retail and healthcare/pharma shift ads to digital and sports betting has gone quiet. However, legal and financial services remain relatively strong and the sector should benefit from incremental revenue from the Olympics on NBC (TEGNA biggest beneficiary, followed by Nexstar and Gray) and the World Cup on Fox (rewards Nexstar and Sinclair) and TelevisaUnivision in Mexico (Spanish language rights in the U.S. belong to Telemundo). Net net, we expect a low-single-digit decline for core, especially with political crowd-out in 2H26.