Sinclair Broadcast Group reported higher third-quarter net income as it got a boost from what are expected to be record levels of political advertising.
The company’s financial results for the quarter do not include its troubled regional sports networks, which are now held separately as Diamond Sports Group.
Net income was $21 million, or 32 cents a share, compared to $19 million, or 25 cents a share, a year ago.
Revenues dropped 45% to $843 million. The year-ago figure includes the RSNs. Excluding the sports business, revenues were up 5%. Excluding sports, media revenues were also up 5% to $836 million.
The results were below Wall Street expectations. Analysts were also disappointed by Sinclair’s guidance for the fourth quarter.
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Third-quarter ad revenues were $374 million, up 14%, excluding the regional sports networks. The company had $88 million in political advertising in the third quarter. Core ad revenues, excluding political ad revenues, were down 10% to $286 million.
“The strength in political is the primary reason for cord advertising declining versus a year ago,” said Rob Weisbord, president of broadcasting at Sinclair, speaking on the company’s earnings call. There was also a pullback in advertising by insurance companies and sports gambling companies, as well as a tough comparison with the Olympics a year ago.
Sinclair is now expecting that political ad spending for the fourth quarter to be between $174 and $179 million, putting the total for the year in the $335 million to $340 million range. That would be up 30% from the previous year and within 2% of the 2020 presidential election year, Weisbord said,
Distribution revenues, excluding the RSNs, rose 4% to $1.295 billion,
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“Strong political revenues continued to drive results in the quarter, and we believe this year we will easily set a midterm election-year record for political advertising revenue,” said CEO Chris Ripley said. “While we saw political displacement this quarter and expect it as well next quarter, we see positive signs for core advertising in certain categories including the legal category and the auto category, which began to grow again this quarter, but overall we are seeing some general ad-market weakness from macro conditions.”
Ripley concluded: “We have been assembling the pieces of these future drivers of our business over the last several years and look forward to our work in these areas beginning to generate meaningful revenues and profits as we move into the future. Given our growth strategies, investment portfolio and sizable cash flow, Sinclair is well-capitalized and well-positioned to continue to develop into a more diversified company with numerous revenue streams and assets.” ■
