Sinclair, Inc. has hired an investment banking firm to explore a possible sale of more than 60 local television stations, according to a report.
On Thursday, CNBC said the media company was weighing the possibility of trimming its local TV station portfolio by as much as 30 percent, which would involve selling off more than five dozen of its 185 television stations across the country.
Through local marketing agreements, Sinclair operates nearly 300 local broadcast TV stations within the lower 48 states. Stations owned by shell companies like Cunningham Broadcasting and Deerfield Media are not part of the strategy, according to a person familiar with the matter, who confirmed CNBC’s report and provided additional information on condition of anonymity.
Sinclair is one of the largest independent owners of broadcast stations affiliated with one of the four main networks — ABC, CBS, Fox and NBC. Stations identified by Sinclair as potential candidates for divestiture are mainly in smaller markets, including areas where Sinclair has pulled back on investments in local programming like news and laid off employees accordingly.
News of the potential sell-off comes one day after Sinclair reported its local television division earned 2.7 percent less advertising revenue during the first three months of this year when compared to the same time period in 2023 when adjusted on a pro forma basis.
Advertising from the telecast of Super Bowl LVIII on some Sinclair-owned CBS affiliates helped bring in much-needed cash on the local television side of the business, Sinclair executives affirmed this week. Otherwise, local core media increased in the single digits when compared to the previous year, the company said.
Distribution revenue — including fees charged to cable and satellite companies for the carriage of Sinclair-owned local television stations — has become a bigger part of the business, with Sinclair earning $384 million during the first quarter (Q1) of 2024. By comparison, advertising revenue brought in just $308 million during Q1, according to the company’s financial earnings.
On a conference call with investors on Wednesday, Sinclair CEO Chris Ripley suggested the company was open to selling off parts of its business where it made sense.
“We have no sacred cows,” Ripley quipped. “We want to unlock the sum of the parts valuation that we think we’re grossly undervalued for — and, to the extent that asset sales makes sense in order to unlock that value and help us de-lever, then that’s something that we’d be open to as well.”
It isn’t clear what timetable Sinclair has in mind to sell off some of its broadcast stations, or even if it will move forward with the year. The plan is under consideration during a lucrative election year, when political advertising dollars can make or break a local TV station’s long-term budget.
On Wednesday, Ripley affirmed Sinclair was seeing “strong political advertising demand, and we expect the strong growth of issue orientated political advertising and what appears to be several closed Senate and House races in our footprint to accelerate this growth significantly as we get closer to this year’s general election.”
But Ripley affirmed this election cycle was not going to be like some previous one because some key races were not as competitive.
“Given the lack of hyper-competitive primaries, we do expect political advertising spend to be more heavily weighted to the third and fourth quarters, as we anticipate most of the spend at the presidential level will be focused on the general election,” Ripley pronounced.
Sinclair’s local TV footprint also allows it to leverage certain streaming-related partnerships, including one struck with Netflix earlier this year that allows it to sell the streaming company’s inventory in local markets where it owns a station.
“In any impact where streaming might it plays, we’ve taken some of those ad dollars,” Rob Weisbord, the Chief Operating Officer and President of Sinclair’s Local Media division, said on Wednesday. “We’ve positioned ourselves to add premium streaming inventory to sell with our local sellers. So, I think it fortifies us both locally and nationally.”
