Sinclair Broadcast Group beats fourth quarter profit estimates

Sinclair Broadcast Group Inc. boosted sales and beat profit estimates in the final three months of 2018, helped by political advertising for November’s general election, the company reported Wednesday.

Shares of Sinclair stock closed up 6.2 percent at $34.83 each on Wednesday.


The Hunt Valley-based broadcaster said October-to-December revenues jumped more than 25 percent to $893.3 million, compared with sales of $712.5 million in the last quarter of 2017. That beat analysts’ expectations of $880 million. For the year, sales grew nearly 16 percent to $3 billion.

Fourth quarter income fell to $206.2 million compared with net income of $443.5 million in comparable period of 2017, when Sinclair saw a $272 million, one-time tax benefit related to federal tax reform. But the profit of $2.10 per share came in 8 cents per share above Wall Street estimates of $2.02 per share.


“We ended 2018 on a very positive note, beating guidance on all financial metrics, with core advertising revenues improving from the first half of the year,” said Chris Ripley, Sinclair’s president and CEO, in the company’s announcement.

CFRA Research analyst Tuna N. Amobi boosted his rating on Sinclair’s stock to strong buy from hold and raised the 12-month target price by $5 to $40 per share, citing “another record year for ‘extremely robust’ political ads on the 2020 elections cycle, and a relatively stable outlook for core ads,” as well as growth in distribution and digital revenues.

Sinclair expects a record year for political advertising in 2020, with $255 million having been spent on political ads in 2018 and a number of candidates already declaring their candidacy for president, he said.

Some of the ad spending for the 2020 election should come as early as the fourth quarter of this year, he said. Sinclair operates TV stations in all key swing states and in many state capitols, making it well-positioned for ad spending.

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For the quarter that ended Dec. 31, political advertising revenues jumped to $149.6 million, compared with $15.5 million in that category in the last three months of 2017, a non-election year. Sales from digital businesses were up more than 22 percent.

Last year was Sinclair’s strongest mid-term political year in the company’s history. The full year’s $255 million worth of political ads just missed the mark of $266 million in 2012, a presidential election year, and topped the $206 million spent in presidential election year 2016.

“I got to tell you, we like our chances on political dollars,” said Steven M. Marks, chief operating officer of Sinclair Television Group, during a morning conference call with analysts. “The best TV show on the planet is watching politics. Every other day there’s somebody joining the race. It really bodes well for local broadcasters...

“I think in 2020 we’re not going to be able to get out of the way of the money.”


Earlier this month, Sinclair said it will launch a regional sports network with the Chicago Cubs. The Marquee Sports Network will carry live Cubs games and ball club features starting with the 2020 Major League Baseball season.

During the conference call, Ripley declined to comment on reports of Sinclair pursuing other sports networks, citing non-disclosure agreements the company has signed. But he said the new network would serve as a model for forming similar partnerships with other teams.

“There is a very unique moment in time here,” with sports representing the most watched programs on TV as ratings have grown, Ripley said. “We’re ecstatic about what we’ve done with the Cubs and think that’s going to be a great addition for us. We’ll look forward to seeing what opportunities may come our way.”