‘Secret Sauce’ Grows Sinclair Auto Ad Sales

While many other broadcasters have been reporting softness in the automotive advertising category, Sinclair Broadcast Group was proud to proclaim today that auto was up slightly in the second quarter.

When an analyst asked about softness in the auto sector during the company’s quarterly earnings conference call, Steve Marks, EVP-COO of Sinclair Television Group, quickly set him straight. “Auto, quite frankly, for the first six months of us, has not been down, it’s been up. I’ll repeat that, it’s been up,” Marks emphasized.

Wall Street may be getting a different report from other broadcasters, but Sinclair’s auto ad sales have been growing. “We’ve been saying this for a few quarters now — we mentioned a few quarters ago that we have a secret sauce, and we do. Our numbers are up. Now, we do expect third quarter to take a little bit of a turn — and we expect third quarter to be slightly down. But our automotive category for the first six months is up. I’m not sure you’re going to hear that from anybody else.”

So, did Marks disclose the recipe for the secret sauce in the public conference call? Of course not.

Looking at television’s biggest ad categories, Marks told the analysts that the retail category and goods and services are right up there with auto as the top three in terms of dollars — “and we’re plus.” Those are the three big categories, “and we’re pumping them all, so we do expect to be positive by the end of the year, Marks said. “And that’s a good story us. Core advertising for us has been consistent. It hasn’t been robust, but it’s been consistent and it’s been positive,” said Marks.

Looking ahead, Sinclair is expecting 2020 to be the biggest year for political advertising in the company’s history. Marks noted how much money has already been raised for the coming election — and it is still very early in the cycle.

Sinclair is slightly involved in the industry’s current retrans blackouts by AT&T/DirecTV and Dish Network, with 19 JSA partners off Dish and Sinclair’s local CBS affiliates off DirecTV Now. But Sinclair CEO Chris Ripley noted that CBS handles the negotiations for DirecTV Now and Sinclair doesn’t negotiate for its JSA partners, so the company is not involved in any current talks.

Also, the Fox regional sports networks that Sinclair is buying from Disney are off Dish — but again, Sinclair doesn’t yet own them and is not involved in talks to resolve the blackouts.

All in all, Ripley is standing by the previous guidance that Sinclair gave Wall Street on retrans and the RSNs. He attributes the blackouts to the pending congressional decision on whether to renew STELA (Satellite Television and Localism Act), which he insists is not needed any more. But the two satellite companies want it to continue and hope to add modifications that would limit broadcasters’ retrans rights. If STELA is simply renewed as it stands, Ripley doesn’t see any impact on his company, but he’d just as soon see it go away.

He noted that blackouts in August don’t have much impact on viewership because major sports aren’t in play. “If there’s a good time to go dark, it is this time of year,” Ripley said.

The CEO also applauded the recent move by major TV network owners to sue to shut down Locast, which streams television stations without paying retrans, claiming an exemption for its nonprofit status. Ripley dismissed the upstart as “a commercial entity masquerading as a nonprofit.”