Sinclair Looks For Auto, Small Biz To Return
Following the abrupt drop in advertising as the nation reacted to the COVID-19 pandemic, Sinclair Broadcast Group has withdrawn its formal guidance to Wall Street for full year 2020. Nonetheless, EVP-CFO Lucy Rutishauser did provide analysts with a forecast for the current second quarter in the company’s quarterly conference call following release of its quarterly earnings this morning.
“Obviously the outlook right now is uncertain, with it unknown how long the economy will continue to be impacted by COVID, and how long professional sports leagues will postpone their seasons,” she said of the decision to suspend full-year guidance.
“For the second quarter we continue to see advertising decline as a result of the games suspension, a general weakness in the economy and our underlying advertiser businesses. For the legacy [TV stations] business our second quarter media revenue guidance is $656 million to $686 million, down approximately 5% to 9% from last year. This is driven by a projected 32% to 39% decline in core advertising,” the CFO said. She noted that political advertising is still expected to rise, particularly in the second half of this year.
Harder hit is the sports segment, where the recently acquired regional sports networks are generally without live games to broadcast. There, media revenues are projected at $748 million to $760 million, down 23%-25%. That’s partly due to the standoff with Dish Network, with no deal expected in this quarter to restore the RSNs to the satellite service.
While advertising is down, Sinclair President-CEO Chris Ripley noted that TV viewership is soaring, with Americans sheltering at home and anxious to find out what is happening. “No other media is as critical to keeping the public aware and informed than local television broadcasting. Since the COVID outbreak, viewership of local news at our stations has risen significantly compared to the pre-COVID weeks.
“In addition, views on our digital platforms were also up very significantly, with STIRR seeing a 50% increase in unique viewers from March to April.” STIRR is Sinclair’s ad-supported OTT platform delivering its stations along with other streams, now including a 24/7 COVID-19 news channel.
Robert Weisbord, president of local news and marketing services, assured analysts that small- and medium-size businesses will return to television advertising as the economy reopens. Meanwhile, sales reps are using this pause to demonstrate what services those businesses may be able to utilize to aid in reopening.
Automotive, he noted, has remained open as an essential business, but dealers will now need to move their 2020 model inventory off their lots. “So we expect that to be robust in the back half of the year,” Weisbord said.
Despite cost-cutting in the wake of COVID-19 — and Sinclair has identified $100 million in savings for this year — the company is moving ahead with what Riley calls “the next generation of television.” A dozen Sinclair markets are planning to deploy ATSC 3.0 this year. “At the same time, several consumer electronics manufacturers plan to produce approximately 20 NextGen TV models this year,” he said.