As it looks to rebrand and incorporate its newly acquired regional sports networks (RSNs) into its company, Sinclair Broadcast Group, the big TV station owner, missed on its net profit fourth-quarter results.
Net income to Sinclair sank to $44 million versus $206 million in the prior-year period, a big political advertising election year -- missing analysts' estimates.
During its earnings phone call with analysts, Sinclair said it will be rebranding its $10 billon purchase of 21 regional sports networks in the coming months -- as well as working on a “digital reboot” of those platforms. In addition, it will look to find new business around legalized sports betting.
“We expect legalize sports betting to lead to multiple beneficial impacts on the RSNs such as the new ad category, enhanced viewer engagement and new ways of monetizing our assets,” said Chris Ripley, president/chief executive officer of Sinclair Broadcast Group, speaking to analysts.
Sinclair’s huge $10 billion purchase of the RSNs came from Walt Disney, by way of Disney’s acquisition of half of 21st Century Fox. (Sinclair also bought an equity state in the New York-area based YES Network).
By looking to work on new digital platform strategy for its RSNs, Ripley said this will help “additional sports rights which could be organically acquired.”
While some analysts appear to be still questioning the sports network deal, Ripley said the RSNs have a stable future when it comes to pay tv carriage: “Approximately 70% of our total subscribers [TV station] are locked in for multiple years significantly de-risking the company and for our sports segment it's over 70%.”
Sinclair is still in carriage discussions with Comcast Cable and Dish Network, which includes RSNs and its TV stations.
Ripley added that its current stock market decline was the result of some misinformation: “You will find that our current stock price describes no value to our sports segment despite having over 70% of the RSN subscribers locked in.” Diamond Sports Holdings, which is where its RSNs interest are housed, is an “indirect subsidiary” of Sinclair.
Sinclair’s sports TV interests posted $788 million in revenue for the quarter. In August 2019, Sinclair closed its RSN deals.
Quarterly core advertising revenues at its TV stations was up about 7% and for the year were 3% higher. Excluding sports interests, total media revenues were down from $820 million versus $849 million. The latter’s higher result was due to big mid-term 2018 political advertising season.
Sinclair’s stock was down 15% in mid-day trading of its shares to $23.43.