Sinclair 4Q Media Revenue Dips 2%

Sinclair Broadcast Group this morning reported that its fourth quarter 2021 total revenue decreased 2% to $1,476 million versus $1,512 million in the prior year period.

Media revenues decreased 2% to $1,460 million versus $1,490 million in the prior year period. Revenues for the quarter were due to lost revenues due to a ransomware cyber incident in October 2021 and the absence of political revenues in a non-political year, offset in part by an increase in professional games played and fewer distributor rebates. Excluding the cyber incident, revenues would have increased for the period.

Total advertising revenue of $383 million decreased 31% versus $554 million in the prior year period, in large part due to the absence of political revenues, as 2021 was a non-political year. Core advertising revenues, which excludes political revenues, in the fourth quarter of $364 million were up 4% versus $349 million in the prior year period, due to a recovery from depressed levels in the same period a year ago caused by the pandemic and a greater number of professional sports games versus the prior year period, offset by the negative impact of the cyber incident.

Distribution revenues of $1,048 million increased versus $917 million in the same period a year ago, due primarily to a significant decrease in the amount of distributor rebates tied to minimum game guarantees that were accrued in the prior period’s results. The increase was partially offset by subscriber churn and dropped carriage last year.

Operating income of $165 million, including adjustments of $19 million, declined versus operating income of $625 million in the prior year period, which included Adjustments of $16 million. Operating income when excluding the adjustments, decreased 71% to $184 million from operating income of $641 million for the same prior-year period.

Net income attributable to the company was $19 million versus a net loss of $3,256 million in the prior-year period. Excluding adjustments, the company had net income of $39 million.

Net loss attributable to the company was $89 million versus net income of $467 million in the prior year period. Excluding the adjustments, the company had net loss of $74 million. Adjusted EBITDA, which excludes adjustments, decreased 62% to $234 million from $617 million in the prior year period.

Chris Ripley, president-CEO, said: “We exceeded our adjusted free cash flow and adjusted EBITDA expectations for the quarter, after adjusting for the impact of the cyber incident we experienced in October. We continue to be encouraged by the rebound in the advertising market in 2021 and expect a robust advertising market in 2022, driven by significant political ad placements, continued strong demand from the service and sports betting categories, and a slow recovery in the auto and other supply-constrained sectors.”

Ripley continued, “The year ahead is an important one for our Company from a content and programming perspective.  Already in 2022, we renewed our local digital rights with the NBA & NHL, paving the way for our new “Direct to Consumer” product, debuted two new original programs on our regional sports networks, and secured live tennis rights for the Women’s Tennis Association tour in Germany, Austria, Switzerland, and the Netherlands.  Coupled with the continued roll-out of NextGen broadcasting and the emergence of gamification elements across our platforms, we remain steadfast in our mission of connecting people with content everywhere.”

Ripley concluded, “Our stock continues to trade at levels below what we believe the company is worth on a sum-of-the-parts valuation.  Together, we believe our investment portfolio, our investment in Bally’s Corp, our tax shield from the purchase of our RSNs, and our excess spectrum, that can be utilized more fully in the future with the NextGen technology, is valued at approximately $4.2 billion or close to $60 per share.  Adding in our core business assets, and accounting for our debt, gives us a sum-of-the-parts value almost triple where our stock currently trades.  Supporting our conviction of our stock’s value, we have repurchased over four million shares over the past four months and will continue to be opportunistic in the future on such purchases. In addition, and recognizing our cash flow generation, our Board increased our cash dividend by 25% as another means to enhance shareholder returns.”

Read the company’s report here.

Also today, Sinclair declared a quarterly cash dividend of $0.25 per share on the company’s Class A and Class B common stock, an increase of 25%. The dividend is payable on March 21 to the holders of record at the close of business on March 7.