Sinclair Broadcast Loses $3.2 Billion in Third Quarter Amid Pandemic’s Impact on Sports Networks
Sinclair Broadcast Group reported a massive loss for the quarter ended Sept. 30 due to charges related to its local sports segment during the coronavirus.
The Hunt Valley-based broadcaster lost $3.2 billion for the July-to-September period as the company wrote off about $4.2 billion in goodwill and intangible assets, the company announced Wednesday.
A year earlier, Sinclair lost $60 million. On a per share basis, the company lost $42.66 a share, compared with a 65 cent loss a year ago.
But excluding those adjustments, the TV station owner reported it would have earned $161 million.
Sinclair said its revenue jumped 37% to $1.5 billion compared with the third quarter of 2019. The gains were driven mostly by the company’s $10.6 billion acquisition in August 2019 of 21 regional sports networks and Fox College Sports from Disney and by higher political advertising revenue.
“Driven by stronger than expected political and sports advertising revenue, and stringent cost control measures during the pandemic, Sinclair’s results for the quarter, excluding the impairment, exceeded our expectations and guidance,” said Chris Ripley, Sinclair’s president and CEO.
Political revenues jumped to $109 million in the third quarter compared with $6 million in the third quarter of 2019 because of the presidential election. Advertising in the broadcast segment has continued to face challenges during the pandemic, but ad demand improved during the quarter, Ripley said. The pandemic also has led to a higher rate of subscription losses, he said.
But he noted that the company has several initiatives in the works to drive growth. Sinclair plans to launch a new sports app by the start of the spring baseball season and will unveil The National Desk, a new headline news service, early next year.
In addition, the broadcaster is continuing to roll out NEXTGEN TV, a new television broadcast technology, to about 45 markets by the end of next year. Other growth drivers include Sinclair’s free streaming platform STIRR and legalized sports betting opportunities, Ripley said.
In addition to the $4.2 billion charge, Sinclair’s operating loss included $13 million in non-recurring costs for transaction, COVID, legal, litigation, and regulatory expenses.
The losses were a result of a decline in distribution revenue brought on by a number of factors, including the recent loss of two distributors — YouTube and Hulu — that made up about 10% of September’s local sports distribution revenue. Sinclair also said it lost subscribers at elevated levels because of the economic climate, the pandemic and other uncertainties.
The losses have not impacted the company’s cash flow from operating activities or its debt covenants, the company said.
Wall Street analysts were expecting a loss of $3.12 per share, on an adjusted basis.
___
(c)2020 The Baltimore Sun
Distributed by Tribune Content Agency, LLC