In the third quarter, a period when it closed the $9.6 billion acquisition of 21 regional sports networks formerly owned by Fox, Sinclair Broadcast Group reported a 47% spike in revenue but a net loss of 64 cents a share.
During a conference call with Wall Street analysts, CFO Lucy Rutishauser called Sinclair a “much different, diversified media company” due to its recent dealmaking. Although it remains the No. 2 owner of local TV stations, the company has become a force in sports via the RSNs, a new RSN venture with the Chicago Cubs and multicast network Stadium. It also is a stakeholder in YES, the New York sports network formerly owned by Fox. Byron Allen and private equity firms are also minority owners in the Fox RSN portfolio, with Sinclair the lead investor and operator.
Total revenue reached $1.1 billion, compared with $766 million in the prior-year period despite a steep drop in political ad revenue. Political proceeds totaled just $6 million in the quarter, down from $70 million in the third quarter of 2018. Sinclair, like all broadcast station and network owners, is already forecasting a record-breaking 2020 on the political front.
Minus the RSNs, revenue of $773 million still came in ahead of Wall Street analysts’ estimates.
CEO Chris Ripley said “protracted negotiations” with Dish have not yet resulted in a carriage renewal after a nearly three-month blackout. He said the likely outcome of those talks remains unclear. “Either we come to a deal with Dish, or their relevance to the industry will be reduced over time,” Ripley said. “Dish foregoing the RSNs is the equivalent, from a viewership perspective, of foregoing the top 10 entertainment programs combined.”
The net loss in the period compared with earnings of 62 cents in the prior-year period. Rutisheister also said $120 million is being kept in reserve for potential exposure to pending litigation over the abandoned Tribune Media acquisition.
Nexstar Media Group wound up buying Tribune this year after a deal proposed by Sinclair in 2017 ran aground in 2018 after federal regulators raised concerns about planned station divestitures. That wake-up call prompted Sinclair to move aggressively in the auction for the RSNs, which Disney was required to sell off after inheriting them from Fox in the $71.3 billion acquisition of 21st Century Fox assets.