Sinclair reports 4th-quarter loss; expects political ad boost

The Hunt Valley-based TV broadcast company Sinclair posted a loss and saw revenues decline in the fourth quarter but said it expects a boost from record-breaking political advertisements this presidential election year.

Sinclair, the nation’s largest owner of local television stations, reported revenue of $826 million, a decline of 14% compared with the fourth quarter a year earlier. The broadcaster posted a loss of $341 million, or a loss of $5.35 per share, for the three months that ended Dec. 31. The company released results after the financial markets closed Wednesday.

“We believe Sinclair, as well as the broader industry, has multiple growth drivers as we head into a presidential election year,” Sinclair President and CEO Chris Ripley said during an afternoon conference call with analysts.

“We expect to see record-breaking political advertising revenues in 2024,” he said, heavily weighted toward the third and fourth quarters and also driven by strong, issue-oriented political advertising and close House and Senate races in Sinclair’s TV station footprint.

The fourth-quarter results were in line with the company’s guidance, but the Tennis Channel exceeded expectations, the company said.

Ripley also said the U.S. Bankruptcy Court approved a previously agreed-to settlement with Diamond Sports Group, the Sinclair subsidiary that owns regional sports networks.

Diamond, now close to emerging from bankruptcy, had reached an agreement with Amazon last month. Under the agreement, customers will be able to stream local Diamond sports channels through Prime Video. Diamond, a subsidiary created by Sinclair to hold the 19 sports networks it acquired from The Walt Disney Co., had filed for bankruptcy reorganization in March, burdened by more than $8 billion in debt.

The settlement, still pending finalization, resolves litigation Diamond filed against Sinclair and other named defendants. Sinclair did not admit any wrongdoing in settling the lawsuit, in which Diamond accused Sinclair of receiving about $1.5 billion as a result of alleged misconduct, including fraudulent transfers of assets, unlawful distributions and payments, breaches of contracts, unjust enrichment and breaches of fiduciary duties. Sinclair agreed to pay $495 million to Diamond under the settlement.

Ripley noted that the reorganization allows the sports networks to move forward with a business model that broadcasters believe is “an important asset for pay-TV bundles.”

“We believe the continued existence of local sports in the pay TV bundle, including via the RSNs, will be a key asset in driving … the pay TV bundle going forward,” he said.

Sinclair relies on retransmission consent fees that cable and satellite providers pay broadcasters to include their signals in channel lineups.

Sinclair had acquired the group of regional sports networks from The Walt Disney Co. for $10.6 billion in 2019.

But the timing proved problematic. When the coronavirus pandemic struck the next year, Major League Baseball and other leagues canceled games and cut their seasons short. The networks’ viewership rapidly eroded. Later in 2020, Sinclair wrote off $4.2 billion of the networks’ value.

In 2022, Sinclair placed the sports networks into the Diamond Sports Group subsidiary to separate their finances from its broadcasting business. Meanwhile, even as sports returned, the sports networks were suffering from the loss of cable TV subscribers as consumers shifted to streaming services. In late 2022, Sinclair wrote off an additional $1 billion of the networks’ value.

Diamond will become a stand-alone company, separate from Sinclair, after a transition.

Sinclair Executive Chairman David Smith, one of the company’s controlling shareholders, acquired The Baltimore Sun with a partner in January.