Sinclair Q2: Strong EPS … And Higher Expenses

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It’s a new day for Sinclair Broadcast Group, which one year ago was grappling with the fact that it would not be merging with Tribune Media.


The FOX regional sports networks it is grabbing from The Walt Disney Co. are poised to bring a new avenue of viewers — and ad revenue — to the company. A rights fee dispute between Disney and DISH is expected to conclude soon.

As such, Sinclair is on solid footing for a bright future, with good Q2 results to bolster the media company.

Total revenue for Sinclair in Q2 came in at $770.72 million, rising from $730.14 million.

While that’s a healthy improvement, the Zacks Consensus Estimate called for revenue that was 0.19% better than what Sinclair reported.

It’s a familiar story, with Nexstar experiencing the same conundrum.

But, a little closer look at Nexstar’s Q2 results shows a weakness in plain sight: Operating income dipped to $106 million from $131.6 million as operating expenses surged to $664.72 million from $598.56 million.

That could be worrisome to a few Wall Streeters.

Net income attributable to the company was $42 million (45 cents per diluted share), compared to $28 million (27 cents) in Q2 2018.

Analysts polled by the Thomson Financial Network projected earnings of 52 cents per share.

“We continue to make great strides in the transformation of Sinclair to a diversified media company,” said Sinclair President/CEO Chris Ripley. “We have closed on the bond financing and successfully syndicated the bank financing to fund the acquisition of the FOX RSNs, which we anticipate, subject to regulatory approval, will close during the third quarter. On the broadcast side, we achieved, and in some cases exceeded, our second quarter guidance in all key financial metrics, and we renewed a multi-year carriage agreement with one of the country’s largest multi-video program distributors.”

Looking ahead to Q3, Sinclair expects media revenue to fall between $695 million and $703 million, with Media Expenses ranging from $500 million to $502 million.

With the Q2 earnings release, Sinclair revealed that its Board of Directors has declared a quarterly cash dividend of $0.20 per share on the company’s Class A and Class B common stock.

The dividend is payable on September 16, to the holders of record at the close of business on August 30.

At 3pm Eastern, SBGI was trading at $46.56, down 5% from Tuesday’s close.

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