Core Beating Expectations For Sinclair

Sports schedule changes due to COVID-19 continued to impact the regional sports networks at Sinclair Broadcast Group, with the company this morning reporting first quarter revenues for the company down 5%. But the quarter was stronger for the local station business.

For the TV stations group, media revenues were down 1% to $665 million, which EVP-CFO Lucy Rutishauser attributed primarily to the absence of political spending, along with the sale of three stations in the past 12 months. “Media revenues exceeded our guidance range on better-than-expected core advertising and distribution revenue. Our core advertising, excluding the three stations that we sold, increased almost 1% year-over-year, which was better than our expectation of down mid-single-digit percent. And, if you adjust for the impact of the Super Bowl moving this year to CBS from Fox last year, core advertising results for the first quarter would have been up low-single-digits compared to a year ago,” she told analysts.

“Growth came primarily from the service and entertainment category, particularly from the sports betting companies. And, if we compare first quarter 2021 to first quarter of 2019, same station core advertising revenues were up slightly, which is a very good result considering the economy is not fully recovered and the country is still working through the COVID pandemic,” Rutishauser said.

As for the current quarter, Sinclair’s 2Q media revenue guidance is up approximately 16%-18%. That includes advertising, retrans and other revenues for the TV division.

During the Q&A, Deutsche Bank analyst Aaron Watts wanted to know how core advertising for the stations is looking in the second quarter.

“We’re looking at it slightly down against 2019, which is our benchmark,” said Broadcast President Rob Weisbord. He noted that business is being placed month-to-month. “May has started off strong,” adding that he’s “cautiously optimistic. We see travel increasing. Business is opening up and so we think we’ll benefit from a more robust economy,” Weisbord told the analyst.

Sinclair President-CEO Chris Ripley said: “I would add to that that we’ve been very, very happy with what we’ve seen on the core advertising. The only thing that gives us a little bit of pause for Q2 is the chip shortage in auto. But all the other categories are, I think, very, very strong…. It’s been a great bounce back for the economy overall.”

Weisbord noted that the TV industry has begun to unlock the new ad category that analysts have been asking about for about 18 months. “It’s now happening,” he said of online sports betting.