Sinclair Broadcast Group, the top owner of local TV stations in the U.S., said it raked in so much ad revenue from the midterm elections that 2018 is now the biggest political ad year of any on record aside from 2012, a presidential year.
In reporting third-quarter financial results, Sinclair said political ad revenue for the full year is 60% ahead of 2014 levels and 20% above the presidential year of 2016. Total revenue for the quarter increased 19% from the same quarter a year ago, to $766.3 million.
“We’re drunk from the election,” joked COO Steven Marks during a conference call with Wall Street analysts Wednesday. He said full-year political ad revenue is now projected to land between $250 million and $253 million, compared with internal projections of $160 million. The numbers “are a strong indication of just how robust a year 2020 could be,” Marks said.
“The strength of political reconfirms that television remains the dominant and premium platform for consumer messaging and building brand awareness,” CEO Chris Ripley said in the company’s earnings release.
The third quarter, which ended September 30, also reflected some of the bruises left by the abrupt termination of Sinclair’s $3.9 billion plan to acquire Tribune Media. The FCC effectively killed the long-gestating deal last summer after a string of divestitures raised concerns, leading the former merger partners to file lawsuits against each other.
Sinclair attributed $13 million of costs in the quarter to the Tribune deal. The company said diluted earnings per share for the quarter came in at 62 cents, more than double the 30 cents a share in the year-earlier period. The impact of Tribune-related costs, “ticking fees” to lenders under credit agreements and spectrum auction costs totaled 31 cents a share.
While the company has been in recovery mode in recent months after the demise of the Tribune deal, CFO Lucy Rutishauser emphasized during the call that “this is the strongest balance sheet in our company’s history.” Full-year free cash flow, she said, would come in between $714 million and $724 million. Finding itself with the resources it had intended to devote to Tribune, the company said it opted to buy back 5% of its outstanding stock under a $1 billion buyback plan.
Ripley also said Sinclair has entered into a content decree with the Department of Justice, which settles the agency’s investigation into Sinclair’s sharing of advertising pacing information among certain of its stations. The DOJ was looking into whether the sharing violated federal regulations. Ripley said the consent decree is not an admission of wrongdoing by Sinclair and does not carry any financial or other penalty. It also pre-empts the possibility of a DOJ lawsuit.