Sinclair Posts Massive $4.2B Q3 Loss, Points To RSN Issues, Changes In Consumer Behavior

Sinclair Broadcast Group posted a massive $4.18 billion third-quarter operating loss due to regional sports networks (RSNs) issues including subscriber erosion, the loss of two major distributors, and overall issues related to the COVID-19 pandemic.

Chris Ripley, president and chief executive officer of Sinclair, stated in a earnings release: "Covid-19 has also exacerbated subscriber churn which has impacted results.”

With regard to its sports networks, virtual pay TV providers -- Hulu + Live TV and YouTube TV -- recently dropped Sinclair’s RSNs, which represented a 10% subscriber reduction.

Sinclair also points the finger at “shifting consumer behaviors due to the current economic environment.” Sinclair’s stock was sharply down 8% in Wednesday morning trading to $18.12.

Sinclair, a major TV station group, bought the 21 Fox RSNs and Fox College Sports for $9.6 billion in August 2019 from Walt Disney. Sinclair also acquired a 20% interest in the YES sports network in the same month.



Total RSN distribution and advertising revenues for the July-September period were at $727 million. A year ago, Sinclair recognized $352 million in RSN revenues.

In the current period, Sinclair’s RSNs posted $124 million in advertising revenue. A year ago, Sinclair recognized $43 million in advertising sales for July through September period.

For the next period -- the fourth quarter -- the company expects a sharp ad revenue reduction -- only $8 million to $9 million.

For all of Sinclair’s business -- TV stations and RSNs -- political advertising was expectedly strong in the third quarter, coming in at $106 million versus $6 million in the non-Presidential election third-quarter 2019 period.

Ripley cites continued concerns in relation to its core advertising.

"While core advertising trends in our broadcast segment continue to face challenges due to the pandemic, we did see improvement as we moved through the quarter, despite having to balance strong political demand that competed for inventory."

Total advertising for Sinclair TV stations was $344 million up 12% from a year ago, when the quarter pulled in $302 million.

Sinclair estimates the final three months of 2020 -- the fourth-quarter period -- will pull in $310 million to $326 million in core advertising and $194 million in political advertising. For its TV stations and RSNs, the company expects a total $503 million to $520 million in advertising.

Overall Sinclair revenue grew 37% to $1.5 billion from $1.13 billion a year ago. Total distribution revenue rose 42% to $1.0 billion, total advertising was up 32% to $500 million.

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