Sinclair Broadcast Group, Inc. (NASDAQ:SBGI) Q4 2022 Earnings Call Transcript

ChrisRipley: I think it’s fair to say that a lot has been accomplished so far in 3.0. We have a number of different proof of concepts that we are running through last year and this year. I do expect the revenue to be modest in the beginning. It’s our view that the consumer benefits and monetization for the U.S. market really needs to get a good push here from the FCC, which is why we’re asking for the task force. And specifically, we believe the FCC needs to set a sunset date for 1.0. When that happens that’s when you’re going to really see scaling of both consumer benefits and monetization within the U.S. market. Now other markets, which we’re very focused on are moving much more quickly, such as Korea or India. And in India, we’re very focused on we think to be a very quick transition into consumer benefits and monetization.

We’ve got two trials going on with the direct to mobile services in Bangalore and Delhi with our partners at Saankhya Labs and the local government broadcaster there in India. And specifically, some of our projects that we’re working for the last several years on with Saankhya will go to market at the end of the year. So the chip €“ the 3.0 chip at Saankhya prototype into mobile phones. We’ll be ready to go to market and first targets being televisions and dongles. But ultimately, it is the only chip that will be on the market which is suitable for mobile personal devices. And the broadcast radio head will also go to market at the end of this year, which will be needed for any cellularized build-out of the broadcast spectrum, which is how we expect India to roll out, also Korea is looking at that specifically and to the extent that single-frequency networks get built here in the U.S. This is the type of technology that will be needed for that.

And then the third significant project we have going on with Saankhya, which will also be ready for commercialization later on this year is the operating system required €“ the software required to run components of that network on a sort of more telco basis rather than a broadcast basis. And so we’re very, very excited about what’s going on in India and how quickly that market is moving. We are cautiously optimistic about the concepts that we’re working on here in the U.S. and ability to generate revenue for next year. But we do recognize that the FCC needs to do its part in advancing 3.0 and really giving the U.S. consumer, the true benefits that this technology promises.

Barton Crockett: And if I could just follow up on the FCC commentary. I thought the expectation was that this would be pretty fully deployed across major U.S. markets by 2024. So what is it that you gain with sunsetting if you have that kind of broad reach, what would you gain if 1.0 was sunsetted in terms of the monetization ability there?

ChrisRipley: Right. So we are €“ look, I’m not taking anything away from the efforts of the industry, which should amount to over 75% of the markets covered in 3.0 this year. So I think it’s an incredible effort from everyone in the industry to do that. The reason why things I don’t believe will be material in 3.0 until the FCC sunsets 1.0 is that when you take a look at just the availability of excess spectrum in those markets, it’s fairly small. And so when you talk about rolling out other services on the broadcast, that can we need more availability of 3.0 spectrum. And that sort of move I believe will only happen once people get line of sight on 1.0 sunsetting.