Sinclair Inc., the new holding company for Sinclair Broadcast Group and Sinclair Ventures after separating the Diamond Sports regional sports networks, is predicting a record political haul next year, Meanwhile, core ad revenues were down 3% in the second quarter, similar to the 2% decline in the first quarter—although the company is predicting a slight increase in the current quarter.
In third quarter guidance, Sinclair is expecting total media revenue to be down 10% to 12% to a range of $733 million to $752 million, compared to a pro forma $832 million for the third quarter of 2022. “The primary reason for the decline is due to the absence of political advertising revenues in a non-political year. For the third quarter of last year, we booked $89 million of political revenues, versus $7 million to $9 million expected in this year’s third quarter,” EVP-CFO Lucy Rutishauser told Wall Street analysts.
In addition, the year-to-year decline in distribution revenues is estimated to contribute $15 million of the decline at the mid-point of our guidance range, which is partially offset by a slight increase in core advertising revenues year-over-year,” she said.
Although Sinclair is not yet providing fourth quarter guidance overall, Rutishauser provided what she called an “early call” on fourth quarter political advertising. That projection is $25 million.
“Auto continues to be a strong performer for us, with that category up 6.5% year-over-year,” COO and President of Local Media Robert Weisbord said in the conference call.
“Overall, legal services continued to perform well for the quarter, but most other service categories, led by insurance, continued to record year-over-year declines,” he added.
“As we begin to look at early third quarter trends, core advertising trends appear to be largely unchanged from second quarter trends, with a notable exception of national advertising, which is improving over the last month,” Weisbord said. Noting that political advertising is already running ahead of the previous presidential election cycle, Weisbord displayed a chart of Sinclair’s footprint for Senate, gubernatorial and hot presidential battleground states, pointing to a record political advertising take this cycle.
Asked for more color on ad trends in the Q&A, Weisbord said “it’s still a month-to-month basis, but we’re encouraged that we’re not seeing any significant cancellations.”
He downplayed the impact of the dual writers and actors strikes, saying all of the networks have contingency plans.
“Dollars have shifted from prime over the last several years into sports, so we’re fully loaded with sports in fourth quarter,” the COO noted.
Having separated Sinclair from the regional sports networks business, Sinclair President-CEO Chris Ripley told an analyst that his company and its broadcasting peers are seeing a resurgence of interest from the major sports leagues in over-the-air broadcasting.
“There’s a big push from owners to go for more reach — and there’s no better reach vehicle than free, over-the-air broadcast. The NFL is a great example of a league that has maximally benefitted from being on free, over-the-air broadcast. And I think the rest of the leagues see that and realize that that’s been a great outcome for the NFL. And looking forward I think that the right answer is that some portion of games for every major sport should have a home on free, over-the-air broadcast to keep exposure maximized and keep interest maximized,” Ripley said.
The CEO spent a good portion of his time on the call going over how the company’s new organization structure lays out the value of the non-TV station assets of Sinclair. The Sinclair Ventures investments were pitched as having a fair market value of nearly $2.3 billion, added to the fair market value of $5.7 billion for the TV station portfolio. Sinclair’s stock, however, trades at a deep discount to the $64.72 per share value implied by the fair market value calculation. The stock closed Wednesday at $13.35.
16 May 2024
23 May 2024
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